Technology and world trade : proceedings / edited by Robert L. Stern

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Technology

and
orld Trade

PROCEEDINGS OF A SYMPOSIUM

U.S. DEPARTMENT OF COMMERCE / NATIONAL BUREAU OF STANDARDS

NBS MISC. PUB. 284

,1111

' , I" J "

Technology

and
World Trade

PROCEEDINGS OF
A SYMPOSIUM

November 16-1 7, 196B

Sponsored by the

Secretary of Commerce of the United States

on the Occasion of the Dedication of the

New Laboratories of the National Bureau of Standards

at Gaithersburg, Maryland

U.S. DEPARTMENT OF COMMERCE
John T Connor, Secretary

NATIONAL BUREAU OF STANDARDS
A. V. Astin, Director

Edited by
Robert L. Stern

National Bureau of Standards Miscellaneous Publication 284 Issued 1967
For sale by the Superintendent of Documents, U.S. Government Printing Office, Washington, D.C. 20402 - Price $1.25

Symposium on
TECHNOLOGY
AND WORLD TRADE

Sponsor: John T. Connor, Secretary of Commerce

Committee: J. Herbert Hollomon

Alexander B. Trowbridge
Irl C. Schoonover

Program Chairman: Robert L. Stern

The Symposium Committee is grateful to the NBS Statutory Visiting Committee
for their help and to the following firms and foundations which made possible
many of the activities of the Symposium and NBS Dedication.

Firms and Foundations: Boeing Company, Corning Glass Works, Dow Chemical
Company, Eastman Kodak Company, E. I. du Pont de Nemours & Company,
Firestone Tire and Rubber Company, Ford Motor Company, General Dynamics
Corporation, General Electric Company, General Mills, Inc., General Motors
Corporation, Gulf Oil Corporation, Hewlett-Packard Company, International
Business Machines Corporation, International Telephone and Telegraph Cor-
poration, Litton Industries, Merck, Sharp & Dohme Company, Inc., Polaroid
Corporation, Radio Corporation of America, Alfred P. Sloan Foundation, Stand-
ard Oil Company of New Jersey, Texas Instruments, Inc., Union Carbide Cor-
poration, United States Steel Corporation, Westinghouse Electric Corporation,
Worthington Corporation, Xerox Corporation.

NBS Visiting Committee: Dr. E. R. Piore (IBM) Chairman, Professor Norman
F. Ramsey, (Harvard), Dr. Elmer W. Engstrom (RCA), Dr. Paul C. Cross (Mellon
Inst.), and Dr. Robert L. Sproull (Cornell).

Symposium Program

and

Table of Contents

November 16, 1966

INTRODUCTION: Dr. J. Herbert Hollomon 2

Assistant Secretary of Commerce for Science and Technology

OPENING STATEMENT: Mr. John T. Connor 5

Secretary of Commerce

Morning Session — Technology: Its Influence on the Character
Of World Trade and Investment

Chairman: Dr. Frederick Seitz, President 7

National Academy of Sciences and National Research
Council

Speakers: Professor Marshall McLuhan, Director 9

Center for Culture & Technology, University of Toronto,
Toronto, Canada .

Professor Richard N. Cooper 15

Department of Economics, Yale University, New Haven,
Connecticut

Discussants: Dr. H. B. G. Casimir 22

Director of Research Laboratories, N. V. Philips Indus-
tries, Eindhoven, The Netherlands

Mr. John E. Reynolds 25

Board of Governors, Federal Reserve System, Washing-
ton, D. C.

Questions from the Floor:

Dr. Melville Green 27

Prof. V. K. R. V. Rao 28

Mr. Charles Vetter 29

Comments:

Dr. Seitz, Professor McLuhan, Professor Cooper, Mr. Reynolds
— Pages 27-30

Luncheon Program

Introduction: Mr. Herman Pollack 31

Director of International Scientific and Technological
Affairs, Department of State

Speaker: Mr. Pierre Uri 34

Counselor for Studies, Atlantic Institute,
Paris, France

Address: INTERNATIONAL COMPETITION AND COOPERATION
IN TECHNOLOGY

iii

Afternoon Session — The Impact of International Measurement

Conventions, Norms and Standards on World
Trade

Chairman: Dr. A. V. Astin, Director 37

National Bureau of Standards

Speakers: Mr. Francis McCune 39

Vice President, General Electric Company, New York,
New York

Mr. A. H. A. Wynn 44

Head, Standards Division, Ministry of Technology,
London, U.K.

Questions from the Floor:

Mr. Leon Podolsky 52

Comments:

Dr. Astin, Mr. Wynn, Mr. Sharpston — Page 52

Discussants: Mr. Fayvel Hadass 53

Director, Standards Institution of Israel, Tel Aviv, Israel

Mr. Francis L. LaQue 55

Vice President, International Nickel Co., Inc., New York,
New York

Mr. Samuel H. Watson 58

Manager, Corporate Standardizing, Radio Corporation
of America, Camden, New Jersey

Mr. C. H. Sharpston 61

Secretary-General, International Organization for
Standardization, Geneva, Switzerland

Banquet Program

Chairman: Mr. John T. Connor 65

Secretary of Commerce

Speaker: The Vice President of The United States

Honorable Hubert H. Humphrey 67

Address: TECHNOLOGY AND HUMAN BETTERMENT

IV

November 17, 1966

Morning Session — The Impact of the Policies of Government on
the Creation and Use of Technology for
Economic Growth

Co-Chairmen: Dr. Donald F. Hornig 73

Special Assistant to the President for Science and
Technology

Dr. J. Herbert Hollomon 83

Assistant Secretary of Commerce for Science and
Technology

Speakers: Mr. Robert Major 76

Director, Royal Norwegian Council for Scientific and
Industrial Research, Oslo, Norway

Mr. Peter G. Peterson 83

President, Bell & Howell Company, Chicago, Illinois

Discussants: Professor James Brian Quinn 98

Dartmouth College, Hanover, New Hampshire

Professor V.K.R.V. Rao 104

Member, Planning Commission, Government of India,
New Delhi, India

Questions from the Floor:

Dr. Hendrik Casimir 108

Mr. Rodney Meyer 109

Mr. M. Zvegintzov 109

Dr. Paolo Rogers 109

Comments:

Dr. Hollomon, Mr. Major, Professor Quinn — Pages 107-109

Luncheon Program

Introduction: Mr. Alexander B. Trowbridge 111

Assistant Secretary of Commerce for Domestic and
International Business

Speaker: Dr. Ibrahim Helmi Abdel-Rahman 113

Commissioner for Industrial Development,
United Nations, New York, New York

Address: TECHNOLOGY AND THE DEVELOPING COUNTRIES

Afternoon Session — The Transfer of Technology Through

Enter prise-To-Enterprise Arrangements

Chairman: Professor Hollis B. Chenery 119

Department of Economics, Harvard University,
Cambridge, Massachusetts

Speakers: Mr. Elmer S. Groo 121

Vice President, IBM World Trade Corporation,
New York, New York

Dr. Aurelio Peccei 126

Chief Executive, Ing. C. Olivetti & C, S.p.A., Ivrea, Italy

Questions from the Floor:

Mr. Miguel Wionczek 132

Prof. L. Rey 134

Dr. M. Kersten 134

Comments:

Professor Chenery — Page 132

Discussants: Dr. John H. Dessauer 136

Vice President, Xerox Corporation, Rochester, New York

Dr. L. R. W. Soutendijk 138

Manager, Brown Bros. Harriman & Company, New York,
New York

Dr. Antonie Knoppers 141

President, Merck, Sharp & Dohme International,
New York, New York

CLOSING REMARKS:

Mr. John T. Connor 144

Secretary of Commerce

APPENDIX:

List of Participants in the Symposium 145

VI

A Symposium:

■ To examine and forecast the impact of technology upon the patterns and
conduct of international trade and investment

■ To consider the international environment needed for the wider generation
and utilization of technology

■ To explore prospects for evolving policies and institutions that promote
economic development through technology and trade

November 16, 1966

INTRODUCTION

Mr. Stern: Mr. Secretary, Honored Guests, Ladies
and Gentlemen: Good morning to you on this brisk
fall day.

ROBERT L. STERN

Program Chairman

Chief, Office of Industrial Services

National Bureau of Standards

The ship "Technology" is about to set off on a
round-the-world cruise. Our adventure and explora-
tion during the next two days takes the form of a
symposium which, to recall the definition of the
Greeks, means: a feast, a gathering together with
free exchange of ideas, a drinking together. Each
aspect of this definition will have its place in these
proceedings.

Now, to get under way, and to introduce the
Sponsor of the Symposium and later the Chairman
of this morning's session, I would like to present Dr.
J. Herbert Hollomon, Assistant Secretary of Com-
merce for Science and Technology.

Dr. Hollomon: Honored guests, friends from Wash-
ington, New York, Delhi, Madrid, Ottawa, Paris,
and Manila and a dozen other world capitals, wel-
come! One of every six or seven of us is a visitor to
the United States. At least 25 nations are represent-
ed here.

No matter where you came from, technology
helped bring you here. Many of you used jet air-
planes. All of us used automobiles or buses. Trans-
portation technology contributed to bringing us
here, I hope quickly, comfortably and safely.

We are meeting in facilities built with a great deal
of technology and we are using the products of tech-
nology to hear and see and record our findings. The
specific occasion which brings us together is the ded-
ication of this magnificent new facility. We are also
commemorating the sixty-fifth anniversary of this
great scientific and technological institution — the
National Bureau of Standards, an agency of the
United States Department of Commerce.

We all owe a debt to technology. We can partially
repay that obligation by making our two-day discus-
sion effective, pointed, stimulating, and helpful to
one another.

We planned this symposium so that you will have
ample opportunity at each session for questions
from the floor. We are also providing two luncheon
sessions and a banquet and at that banquet the
Vice-President of the United States will speak to us.
We hope that will encourage you to recognize that
this is a symposium of people talking together, rather
than a few of us talking to all of you.

We believe that technology, appropriately under-
stood, morally and ethically applied, is the best hope
for a peaceful, prosperous society. Technology does
not automatically flow to where it is needed. It is
necessary that men spend their wills and their hearts
to bring technology to people in a way that will con-
tribute to their progress, their health, and their well-
being.

For the opening remarks on these subjects, we are
privileged to hear the Sponsor of this conference,
the distinguished Secretary of Commerce of the
United States, the Honorable John T. Connor.

J. HERBERT HOLLOMON became Assistant Secretary of Commerce for Science
and Technology in May 1962, having been nominated by President Kennedy and
confirmed by the Senate. In this position he supervises the Patent Office; the Na-
tional Bureau of Standards; the Environmental Science Services Administration;
and the Office of State Technical Services.

He also is the principal advisor on scientific and technical matters to the Secre-
tary of Commerce, and he is a member of the Federal Council for Science and
Technology, consultant to the President's Science Advisory Committee, and Chair-
man of the Interdepartmental Committee for Atmospheric Sciences.

Dr. Hollomon was with the General Electric Company for 18 years, as metallur-
gical researcher, Manager of Metallurgy and Ceramics Research, and General
Manager of the General Engineering Laboratory.

JOHN T. CONNOR was nominated Secretary of Commerce by President Johnson
on January 6, 1965, and confirmed by the U.S. Senate on January 15. He assumed
his cabinet post after a career of law, government and industry, which spanned a
quarter of a century since his graduation from Harvard Law School in 1939.

He is a graduate of Holy Rosary High School in Syracuse, New York; of Syra-
cuse University where he received his A.B. degree, magna cum laude; and Harvard
Law School where he received an LL.B. degree in 1939. Mr. Connor then was
associated for several years with the New York City law firm of Cravath, de
Gersdorff, Swaine and Wood.

In 1942, Secretary Connor was appointed General Counsel of the Office of
Scientific Research and Development, of which Dr. Vannevar Bush was Director.
In 1944, he went on active duty with the U.S. Marine Corps, serving in the Pacific
as an air combat intelligence officer. Returning from Japan in 1945, he became
Counsel to the new Office of Naval Research, and later, Special Assistant to Secre-
tary of the Navy James Forrestal.

Mr. Connor joined Merck & Co., Inc., in 1947 as general attorney and held
several other key executive positions before being elected president of the company
on September 27, 1955. In February 1967, Mr. Connor returned to private in-
dustry and became President of the Allied Chemical Corporation.

OPENING STATEMENT

Technology and Management As Instruments of World Progress

Secretary Connor: Thank you, Dr. Hollomon. Hon-
ored guests, ladies and gentlemen: I am pleased to
welcome all of you to this symposium on technology
and world trade. Many of you have come a great
distance to participate in this dialogue. I am
confident that when we are finished our efforts will
be repaid with a clearer view of the common prob-
lems we face in the global exchange of goods, serv-
ices, commodities, knowledge, attitudes, and ideas.

At the dedication of these magnificent facilities
yesterday, President Johnson sent a special message
of greeting. He noted that the symposium would
open here today and expressed his confidence that
the ideas emerging from this symposium will provide
a fresh insight into the task of creating a life of
abundance for people everywhere. Technology and
world trade are vital elements in the economic life
of all nations in the shrinking world and accelerating
times of today.

The National Bureau of Standards and
the Department of Commerce

This symposium is especially appropriate at this
time, coinciding with a momentous event in the his-
tory of the National Bureau of Standards. The De-
partment of Commerce is charged with helping
create those conditions which will encourage and
stimulate the growth of the national economy. The
National Bureau of Standards is a charter member
of the Commerce Department, having joined us
when the department was established more than half
a century ago. NBS is also the nation's measurement
laboratory, our spokesman in the international lan-
guage of science, a center of research, technology,
and its application.

The dedication of these new laboratories occurs
as the Bureau is placing increased emphasis on sev-
eral fruitful areas of cooperation with American
business and industry. International standardization
of industrial products, the development of perform-
ance criteria for technological goods and services,
methods for measuring the performance of entire
systems, and the dissemination of scientific data and

technical information — these activities all have great
relevancy to international trade.

From the earliest days of its planning, I have
sensed an air of excitement about this particular
symposium. For this reason, I don't want to delay
your exchange of ideas and opinions for one minute
longer than necessary. In this setting, sequestered
from the day-to-day considerations of immediate
problems, perhaps we can suspend the old dogmas
and construct an edifice of new ideas, beginning
from the ground up. I would like to take a few
minutes at the beginning to examine with you some
of the foundation stones on which your dialogue can
be based. These fundamental notions are axiomatic
to the specialist. To a nonspecialist, such as myself,
they sometimes provoke more questions than they
provide answers.

Purposes of the Symposium

This symposium has three purposes: First, to
look at the impact of technology upon international
trade and investment. Second, to outline a world en-
vironment which will encourage more widespread
use of technology. And, third, to seek new ways for
technology and trade to promote economic develop-
ment.

These objectives combine to create a formidable
challenge. Fortunately, you and your speakers are
admirably qualified to come up with constructive
answers.

Fortunately, our constitution created a union of
states and precluded any attempts to raise trade bar-
riers between one state and another within the Unit-
ed States. As a result, this early common market
grew into a mass market with economies of scale
which contributed immensely to our economic
growth and our technological development.

In spite of this favorable environment, however,
we have not yet achieved a nationwide parity in
standards of living or in the level of technological
development. The Appalachian region of America
stands in stark contrast to areas on the East and
West Coasts, both economically and technologically.

Through our system of agricultural colleges, re-
search stations and farm specialists scattered
throughout the nation, the dissemination of the lat-
est agricultural technology has become a successful
reality in this country. We have not yet been so suc-
cessful in the manufacturing and service sectors of
our economy. Studies conducted by the Commerce
Department show that there is a wide area of
difference, a wide range of difference, between the
most efficient and the least efficient plants in any
given industry. This pattern exists regardless of the
size of the plant, and this condition is true whether
it is a labor intensive industry or a high technology
industry. In some industries, the value added per
employee in the most efficient plants is five hundred
percent above the amount for the least efficient
plants.

Think of the competitive advantage this offers the
top firms. Or on the other hand, think of the waste
in human and material resources among the lowest
firms. These efficiency gaps include many compo-
nents — management skills, availability of capital,
marketing know-how, participation in world trade,
condition of plant and equipment, flexibility of labor
and management, ability to utilize the latest technol-
ogy, and many, many others.

Our economists estimate that if all companies in
all industries followed the most advanced practices
and techniques of the most efficient companies, the
growth in national productivity would greatly exceed
the growth rate of recent years. Practically speaking,
this may be expecting too much, but it is clear that
there exists a great potential for improvement.

Opportunities for Better World Use
for Technology

Looking at the broad problems of technology and
trade from a global point of view, what needs to be
done? More to the point, what can be done?

First, there are some institutional goals we could
work toward. These include such things as greater
participation by all countries in the development of
international standards for industrial products, an
accelerated and more broadly based movement to-
ward some form of international patent cooperation,
an unfettered flow of capital among nations with due
provision made for special circumstances and special
cases, the reduction and elimination of barriers to
trade on a fair and reciprocal basis, wider availabil-
ity and movement of technology among nations.

Second, we need to change our approach to the
fact that there are differing levels of technology in
various fields among the nations of the world. Our
thoughts and actions should not be directed toward
compensating for these differences artificially.
Rather we should try to assure that each nation has
access to the particular technology most appropriate
to its own goals as defined by that nation. In this
way, trade and economic growth will both be en-
hanced.

Third, we need to know more about the processes
of technology, trade and economic growth, how they
interact, why a certain formula succeeds for one
country and fails in another. Toward this end, the
United States has joined with the member nations of
the OECD in a major study of the processes by
which nations are able to develop and exploit
science and technology for the attainment of eco-
nomic and other national goals.

The results of this study should be useful to all
nations and applicable to all levels of development.

Can these objectives be realized? I don't know of
any substantive reason why they cannot, if we have
the will to succeed and a willingness to cooperate.
The United States stands ready to join with all other
countries in efforts to disseminate and use the
knowledge of mankind for the benefit of mankind.

November 16, 1966

Morning Session — Technology: Its Influence on the Character of
World Trade and Investment

Dr. Hollomon: I should now like to introduce to
you Dr. Frederick Seitz, the President of the Nation-
al Academy of Sciences, who will be the chairman
for this morning's session.

Dr. Seitz: Thank you, Dr. Hollomon. Our session
deals with technology in world trade, as has been
made clear. I would like to say a few words of intro-
duction about both.

Technology in Human History

Man is innately a technologist — inherently inven-
tive. This characteristic is part of his birthright
and is linked intimately with the constitution of his
genes. The long road of evolution of our species
over the past million years is in fact littered with
the products of our inventive technology. There is
much direct evidence for the crude tools of stone
our forebears have produced and much indirect
evidence for those made of wood and bone.

When our species emerged about 50,000 years
ago with its present genetic make-up, more sophisti-
cated devices appeared, including arrows, spears,
axes, hooks, nets, and intricately woven objects.
The basic genetic equipment which made us tech-
nologists is well known. This includes manual dex-
terity, stereoscopic vision and the ability to reason.
Armed with these attributes and the willingness to
focus attention on issues of immediate practical
importance, our antecedents moved ahead, first as
hunters and food-gatherers and then, about 10,000
years ago, as agronomists. Five thousand years ago
we became masters of the great river valleys which
yielded such riches that it became possible to develop
professional specialization, including most of the
fields of modern engineering.

Between one thousand and fifteen hundred years
ago those of our ancestors living in Northern Europe
learned to cultivate the soils of the temperate climate
and to develop the technology associated with that
climate. This advance in technology, in turn, made
the urban revolution possible in northern latitudes.
Without such a revolution the settling of North
America would have been of little meaning to man-

kind, except for the access the discoverers might have
had to the natural raw materials of the new land.

Science Revolutionizes Classical Technology

About 500 years ago, the earnest, practical phil-
osophers of Western Europe conceived of an entirely
new basis for technology. Inspired by access to the
manuscripts of Greek science, they conceived of
establishing a new form of technology which would
extend well beyond the scope of classical technology
and which would rest upon investigations of the
basic laws of nature. In brief, they recast ancient
science into a new form and evolved what we now
call modern science — a process designed to gain
knowledge of nature characterized by the careful
interplay of observation and theory. It took time
for the dream of these philosophers to be realized.
However, starting about 170 years ago with the
dawn of the age of modern chemistry — a product
of the scientific method — a great scientific revolu-
tion in technology was set into motion. It is easy
to show that by the present time technology would
have been running out of momentum if it did not
have the contributions of science. By the end of this
century the methods of classical technology would
have proved to be stagnant.

The Impact of Trade on Technology

Historically, as Secretary Connor pointed out so
eloquently, the evolution of technology has been
very closely coupled with the development of trade.
Once man became a trading animal, as he did very
early — at least 10,000 years ago — he began to trade
technology along with material objects. This not
only stimulated his own process of technical innova-
tion, but also made him aware of the importance
to his own welfare of the acquisition of alien meth-
ods of technology. The interchange of technology
has in fact been as important a component of trade
as the interchange of material products. Trade not
only brought British tin to the Mediterranean, but
stimulated the entire technology of producing tin
alloys. The trade with China, initiated by the Chi-

FREDERICK SEITZ is the first full time President of the National Academy of
Sciences, a position to which he was elected in 1965 for a six-year term. He served
the previous three years on a non-resident basis while continuing his affiliation with
the University of Illinois. There he was most recently Dean of the Graduate Col-
lege and Vice President for Research. Earlier he headed the Physics Department
for seven years, following an extended period as Research Professor of Physics. He
taught at the Universities of Rochester and Pennsylvania, and at Carnegie Institute
of Technology. He also spent two years with the General Electric Company.

Dr. Seitz, a native of San Francisco (1911), California, received his A.B. in
Mathematics from Stanford University (1932), earning his Ph.D. in Physics at
Princeton two years later.

Dr. Seitz is presently a member of the President's Science Advisory Committee
and of the Statutory Visiting Committee for the National Bureau of Standards.

Dr. Seitz is Vice President of the International Union of Pure and Applied
Physics, and a member of the Committee on Science and Technology in Develop-
ing Countries of the International Council of Scientific Unions.

nese, not only brought Chinese textiles and ceramics
to the West, but stimulated a host of parallel devel-
opments in the corresponding fields of technology
in the Mediterranean. Our own trade with Europe
and Asia accelerated our national development not
only through the import of materials, but also by
stimulating our own technology. Our own techno-
logical advances have, in turn, had a very deep
influence on the parts of the world with which
we trade.

Technology based upon science developed very
slowly in our country. It was, in fact, only in this
century that we accepted broad responsibility for
generating science-based technology. Earlier in our
history we were in the main acquirers of products
or of licenses stemming from science-based tech-
nology generated elsewhere. Interestingly enough,

the stimulus for the reform came less from scientific
scholars than from the leaders of industry who de-
sired to make their products competitive throughout
the world. In fact, the establishment of the great
industrial laboratories, such as those of the General
Electric Company, the Bell Telephone Company,
and du Pont, near the turn of the century can be
regarded to represent the dawn of a genuinely new
era in our own technological history.

If one tries to characterize the various phases in
our history of creative technology, one can perhaps
say that our period of innovation in the pattern of
classical technology reached its climax in the era of
Thomas Edison. The revolution associated with the
computer is the first major product of our creative
association with science-based technology.

?SSS3»5S3SS3SS5

Dr. Seitz: With this background of historical obser-
vations on man's relationships with technology and
trade, I would like to introduce our next speaker on
the morning session, Dr. Marshall McLuhan. Dr.
McLuhan is Director of the Center for Culture and
Technology of the University of Toronto, Canada.

Dr. McLuhan: Mr. Secretary and ladies and gentle-
men: The environment you have provided for us
makes an occasion to relate to you one of our Cana-
dian cultural products — French-Canadian grievance
humor. Have you ever noticed that good jokes tend
to record grievances? The grievances of the French-
Canadians have been much related to the electronic
age, in which they feel a new need for separation
and decentralism, and some of the stories that go
with that are of this grievance type.

A mouse is being pursued around the house by
the cat and finally discovers a hole in the wall where
it hides. And then all is silent until a kind of bow-
wow, arf, arf, sound is heard. The mouse figures the
house dog has come along, scared the cat away, and
ventures out. The cat grabs it and as the cat chews
the mouse down, it says, "You know, it pays to be
bilingual."

Another Canadian contribution to this grievance
humor is the sign that hangs over a junkyard in To-
ronto which reads, "Help beautify junkyards. Throw
something lovely away today."

It is a very rich observation.

There are quite a lot of these grievance stories,
which are rather instructive, but I am going to ven-
ture a few themes here in relation to our very rich
subject of technology and world trade.

The New Environment for Man

I suppose one could simply sum the whole thing
up and say that any economy is an information pool
and, under electronic conditions, the world is a sin-
gle information pool; therefore, there can and must
be just one economy. As the world becomes a total
information pool, and therefore simultaneous, the
natural tendency is for all the older patterns and
barriers and structures to be swept aside.

I think one might safely predict, for example, that
with the coming of the satellite environment for our
planet, the planet is no longer the human habitat.

The planet is now the content of a man-made en-
vironment of electric information and satellite infor-
mation. When the planet itself goes inside a man-
made environment, the planet becomes as it were,
an old nose cone, an art form. Every time a new

MARSHALL McLUHAN is Director of the Center for Culture and Technology at
the University of Toronto. Prior to this, he was Professor of English at that Uni-
versity's St. Michaels College, and earlier held teaching assignments at Wisconsin
University, St. Louis University and Assumption College.

A native of Edmonton, Alberta, Canada, Dr. McLuhan obtained his Bachelor's
and Master's Degrees in Arts from Manitoba and Cambridge Universities, then
receiving his Doctor of Philosophy degree at Cambridge in 1943.

Dr. McLuhan is the author of several books, including "The Mechanical Bride:
Folklore of Industrial Man," "Understanding Media" and "The Gutenberg Gal-
axy." He has in addition contributed to numerous periodicals including "Daeda-
lus," the "Kenyon Review" and other literary magazines.

J

environment of any sort goes around another one,
every time a new technology creates a new environ-
ment, that environment goes around the environ-
ment of the preceding technology, turning the old
technology into an art form.

Environments need to be understood as processes.
They are not containers, they are processes. So
when the TV environment went around the old
movie environment, the movie industry became in-
creasingly an art form. The process of the TV sur-
round has turned increasingly the old movies into
art form, and this now is happening to TV itself
with the satellite environment going around TV.

I suppose, too, it is natural to observe that in the
age of the circuit, the electric circuit, with its feed-
back and folding back into itself, we have come to
the end of the neolithic age, the age of the planter,
the strip culture, with each person mining his own
bit of knowledge. With the diffusion of knowledge
instantaneously, in all sorts of patterns simultane-
ously, a great diversity of patterns, we have come to
the end of the neolithic time.

But the strange thing is this, that we have flipped,
as it were, back into the age of the hunter. The
electronic age is once more the age of the hunter,
only it is now the hunt for information, for data.
The image of Sherlock Holmes and of James Bond
offers (again) the age of the hunter.

Reversals and the World Information Pool

This aspect of our time merely points to a
number of other reversals and flips that are upon us
technologically.

For example, with the coming of xerography and
electric circuitry to the book trade, a typical type of
reversal that is manifest in many other fields has set
in. Instead of the book being a repeatable commodi-
ty, a package — and it was the printed book that was
the first uniform, repeatable commodity, making
possible markets and prices as we know them — the
book tends to be an information service.

The book can be programmed for the individual
request — tailor-made, custom built. The tendency of
circuitry and electronic movement of information is
to break up the old patterns of mass production and
uniformity into the custom-built service.

As we create these new and revolutionary situa-
tions, it is typical that we go on talking about the
old situation as if it were still the dominant one.

With xerography as a service, it is possible, for
example, to form an electrical information center.
Say I am working on Egyptian arithmetic and

I would like all the most recent material. I read such
and such, I know such and such languages, and in a
few minutes or hours, a package is gathered from all
the libraries in the world and can be delivered to my
door. The book is becoming, with the aid of the
computer and the telephone and Xerox, a complete-
ly flexible service.

This pattern, for example, as it enters the world
of education, means that instruction in the older
classroom sense will tend to yield, as it is already
yielding, to discovery as a technique of learning.
The older pattern of imposing knowledge or instruc-
tion upon the young is steadily yielding to the pat-
tern of discovery as a means of learning.

Our dropout situation is not unrelated to this.
Many children have the feeling that by being sent to
school, their education is being interrupted.

Because we — literally — live in a world in which
the outside environment is far richer in information
than the schoolroom.

Pattern Recognition and Information Overload

Jacques Ellul, the French philosopher of technol-
ogy, observes that: "The Twentieth Century child is
engaged from morning to night processing data, on a
massive scale." You might ask yourself, what hap-
pens when we subject children to massive doses of
man-made environment, what happens to their out-
look, their inlook and their outlook?

One thing that happens is that under conditions
of informational overload, which is normal, they de-
velop patterns of mythic thinking, because it is only
by mythic thinking that you can cope with informa-
tion overload. Pattern recognition is another name
for mythic thinking. Instead of just acquiring data,
you have to discover patterns in order to survive.

There is a well-known story by Edgar Allen Poe.
It is called "THE MAELSTROM"— about a sailor
who goes fishing one afternoon and becomes so ab-
sorbed in his thought that he forgets to notice the
turn of the tide and suddenly is caught in a great
whirlpool. He realizes he can't row his boat out of
the maelstrom and so he begins to study the action
of the maelstrom. He observes that certain kinds of
materials are sucked down into it and never return
while other kinds pop up again. He attaches him-
self to one of these recurring objects and survives.
This is pattern recognition. My point is: to under-
stand the process is an indispensable way of coping
with information overload.

But there are some other points I want to intro-
duce, apropos of the creation of huge new environ-

256-707 0-67— 2

11

ments by technologies. One of the peculiarities we
discovered lately when we began working on this
problem of pattern recognition, is that whenever a
new environment forms, it is invisible and what you
perceive is the old environment.

I think it was Bertrand Russell who asked, if bath
water were to get hotter one degree per half hour,
would we ever be able to scream. Would we ever
know to scream before we were completely boiled?
The answer is no, we wouldn't, and it is apparently
quite possible to boil fish alive by simply raising the
temperature slowly almost imperceptibly.

Each of us forms a body percept, from moment
to moment, based upon his intake of sensations, per-
ceptions, but we are completely unaware of this
body percept which we form of ourselves from mo-
ment to moment. It takes considerable dexterity and
skill to observe one's own body percept, the image
we form of ourselves. The immediate surrounding —
the new environment, whatever it is — is always in-
visible to the whole population.

Navigating with the Rear- View Mirror

What they see in the mirror is the old environ-
ment. When the railways were new on this continent
a century ago, the people of that time formed an
image of their new industrial iron horse environment
that was the Jeffersonian ideal of agrarian pastoral
life.

Modern suburban man lives in the rear view mir-
ror of "Bonanza." He perceives not suburbia but
"Bonanza life." That is the old environment, the
preceding environment, a world of compassion, ini-
tiative, and resourcefulness, a comfortable form of
the frontier. Very picturesque!

The habit of always using the rear view mirror for
navigation is now yielding because at jet speeds
the rear view mirror has proved to be a somewhat
unreliable device. But, also at very high speeds, it
becomes possible to recognize environments that
were previously not noticeable.

The Effects of the Electric Technology

And so the advantages of high speed change is in
the recognition of forms that previously had been
imperceptible. If education is undergoing the flip
from instruction to discovery or tending that way,
there are other extraordinary flips resulting from
technological advance. There is a general tendency
to use the audience as a work force instead of as a
target or consumer. One of the strange results of the

speed-up in information processing and speed-up of
access to information is that the total audience can
become involved in decision-making.

The idea of having an audience as work force, in
politics and in business, is perhaps foreshadowed in
the advertising world, where for some time now a
new environment has been forming.

As information processes improve, the advertising
world is steadily substituting itself for the products;
that is, people now derive their satisfactions not
from the product but from the advertisement.

You see, the research of the advertisers has long
revealed to them that the people who read ads are
people who own the things, not the people who
should or might buy them. People read ads as a
source of satisfaction, consumer satisfaction. In an
electric information environment, the ad is steadily
replacing the product. And this isn't really paradoxi-
cal. It is what we have been working to achieve for
a long time.

The programming of the human environment by
information, the total programming of the human
environment by information, is more and more with-
in reach with satellite broadcasting. You can now
program the world environment as a single shared
experience. As information levels rise and improve,
we share the experience of this planet as a single
thing with everybody.

These are huge flip-overs or reversals that natu-
rally tend to be hidden simply because they are of
such vast environmental form, and you may wish to
discuss them.

One of the flips that exists now in the age of the
computer is that it becomes possible to enter a
cashless society. By use of the credit card, it is pos-
sible to effect all type of transactions without any
form of cash whatever. And when it becomes possi-
ble to do something, there is usually a kind of rest-
less itch until something is done about it.

I am going to mention one further flip-over that is
taking place in our own homes, under our own
noses, and with great disturbance in our lives, but
without any recognition of the pattern.

With the coming of the circuit, man folds back
into himself. With the coming of television, man be-
comes, instead of camera going out into the world,
man becomes screen.

Our children for the last ten years have had the
extraordinary experience of growing inside them-
selves with television. They are on the receiving end
of that electric charge. It carries them inside them-
selves through the looking glass into a world,

12

through the vanishing point into a kind of inner
meditative world.

The effect of television has been to orientalize the
Western world. This is so vast a program or repro-
gramming of the sensory life as to be completely
unobserved. But, while we are busy westernizing the
East, we are hastily easternizing the West.

Our children regard parents who belong to the
old Western civilization as finks, as squares, simply
because they are put together on a different pattern
from the pattern that children take for granted, of
inner depth and commitment.

A young friend from Harvard was saying the other
day, "We are not a goal-oriented generation." He is
a young architect. He said, "Sure, we'll learn medi-
cine, we'll learn architecture, but we wouldn't dream
of setting ourselves a goal in life and moving steadi-
ly toward it."

He said, "What we want is to know what is going
on in the total human environment. We're not a
goal-oriented generation."

The hunter isn't a man with a goal. He plays the
total field, and I think electronically we are com-
pelled to develop our perception and our awareness
this way if we are going to exert any sort of control
over the next changes in the world.

The Hot and the Cool

We might ask ourselves to what extent would it
be possible to have trade without information cover-
age, and also to what extent would it be possible to
have war without information?

If there were no coverage of any sort of any war,
no reports, no information, how would this change
the nature of war? To what extent is war accelerated
and raised into a potent force just by good cover-
age? To what extent is information coverage, itself,
aggressive warfare?

In a world in which the whole environment is
made of information, it is natural that war should be
conducted by the same means and that top weap-
onry is increasingly that of the image. We call it
the "cool" war, and that means totally involving.

I have a friend in New York, Tony Schwartz, the
famous tape recording man. He said: "You know,
when I came to this part of town, years ago, the
police told me: Tony, if you are ever in trouble,
never shout HELP. Shout FIRE! They said, if you
shout help, you'll get nothing. But if you shout fire,
every window will go up."

Now this is the mystery of the "hot and the cool."
People don't want to get involved in "help" situa-

tions; it is too "cool." Fire is a more reassuring and
less involving medium.

There is also one very relevant thing to point out
about the computer, which has had its share of at-
tention already. Notice that in line with the school
of the rear view mirror, the computer is being set to
do all the old jobs, not the new ones. It is like the
buggy whip holders in the first motor car. Com-
puters are being given the job of card filing and re-
trieval. But, the computer, by speeding up the total
available human experience, has in effect put outside
— as the new environment — the human subcon-
scious or unconscious.

For years I've been noticing the extension of con-
sciousness by various technological means. The
human unconscious is the total experience of man-
kind, stored without any story line, just jumbled
and assembled in the human unconscious. Now,
with instant dispersal and instant retrieval sys-
tems, we have the all at once. We have put outside
us, as a new environment, the unconscious which is
part of that return to the age of the hunter, the most
primitive form of human society.

The Environment as the Product of
Consciousness

The unconscious, just because it is an all at once
world of everything that ever was, now becomes en-
vironmental. We can now have outside ourselves
everything that men ever were, or knew, or experi-
enced — simultaneously. This perhaps does relate to
the satellite environment of our planet, turning the
planet into an old nose cone; an old hunk of camp,
an old art form.

The availability of the unconscious also insures
the future in terms of investment. I'm pretty safe, I
think, in saying that the future of investment on this
planet is going to be overwhelmingly the restoration
of the planet through all the phases of its develop-
ment. The countless billions of dollars that will be
spent in the next decades refurbishing this planet —
just like doing a Williamsburg job on the old planet
— will be an overwhelming theme and area, recon-
structing the total planetary process as it has come
down to us through countless ages. This is the most
elaborate form of data processing that is conceiva-
ble.

The extension of the unconscious compels man in
the electronic age to live, mythically, as a way of
pattern recognition, and a way of coping with this
vast amount of knowledge. If you look around at
the changes in the world of the arts — not to mention

13

science, which is a prolific source of new myths, new
mythic form and understanding of nature — you en-
counter this strange reversal. Way back in the age of
the hunter, paleolithic man was firmly convinced
that he made his environment. He did it by rituals,
dances, and various cosmic communing, and behav-
ioral patterns. Primitive men always thought they
made the world; they wound it up and renewed its
energies by their rituals.

Instead of just sitting, instead of just being an
occupant of the world, we make it. Prior to the
Greeks, men thought they made the world; then

came a few centuries of sitting and living in the
world, man contained in his world.

Then with the age of the circuit, a return to the
age of the hunter, man makes his world once more,
makes his environment, is no longer just an inciden-
tal content item.

Are we not moving very much back into that
state?

Is not this conference really dedicated to the
theme that man makes his environment, makes his
world? Under electronic conditions, we return to
that strange state of the most primitive society —
making our cosmos!

14

or output of these various inputs. We assume we are
getting our money's worth, but we can't measure the
value well.

Dr. Seitz: Our next speaker is Dr. Richard Cooper,
Professor of Economics at Yale University.

Professor Cooper: When our hosts asked me to
speak, they suggested that I summarize the light
which the academic subject of economics might shed
on the relationship between technology and interna-
tional trade, and to quantify if I could the influence
of technology on foreign trade and investment. I du-
tifully read all that I could find by professional
economists on this subject, much of it not yet pub-
lished. On the basis of the material I could find,
I must give the profession low marks.

Economic theory has largely skirted the issue,
both on the side of technology and on the side of
trade. The contribution of technology to economic
growth has, up to now, been derived simply as a
residual, after allowing for other things which we
know about.

The difficulty in quantifying the effect of technol-
ogy on trade is, however, I think intrinsic, as I will
try to indicate.

Quantifying the Effect of Technology on
Economic Growth

Robert Solow, ten years ago, estimated that tech-
nical change accounted for about two-thirds of the
growth of the U.S. economy, after allowing for
growth in the labor force and in the capital stock.

Edward Denison in 1962 whittled the con-
tribution of what he called "increased knowledge and
its application" down to twenty per cent, after allow-
ing for more efficient use of existing resources and
better education of the labor force as well as growth
of the labor force and the capital stock.

Lately a more positive approach has been taken
to measurement of the contribution of technology,
but we still must rely excessively on such imperfect
indicators as expenditures for research and develop-
ment, the number of scientists and engineers en-
gaged in research and development, patents applied
for, patents granted, and so on. We still do not
know how to measure satisfactorily the productivity,

Trade Theory and Reality

The situation is not much more satisfactory on
the side of trade. Most theoretical discussions of in-
ternational trade involve what may be called tradi-
tional trade, the exchange of food for raw materials
or for simple manufactures. David Ricardo, the
English inventor of our theory of comparative ad-
vantage to explain trade flows, drew his example in
terms of wine and cloth.

The United States imports coffee and exports
wheat, both as a result of climatic and soil
differences. Europe is often characterized as an im-
porter of food, fuels and other raw materials, and an
exporter of manufactures.

The composition and direction of trade depends,
in the theory, largely on natural endowment, al-
though occasionally special skills are also involved.

It is difficult to reconcile this theoretical picture
of trade patterns to the patterns which have actually
developed.

Manufactured products now account for nearly
sixty per cent of the value of world trade, up from
twenty-five per cent in the 1920's, and the propor-
tion is still growing. Trade among major industrial
countries now accounts for nearly half of world
trade and the share of this trade which is manufac-
tures has grown even more rapidly than is true for
the world as a whole.

The growth in trade of manufactures does not
reflect a need to pay more in manufactures for the
food and raw materials needed by the industrial
countries. It represents increasingly an exchange of
manufactures for manufactures. The growth of this
type of trade is due to a variety of factors, including
the reduction in trade barriers over the last fifteen
years, and the rising importance of brand name
products in consumer purchases. But a key factor
may also have been the rapid pace of technological
innovation which has taken place. An innovation
adds to the list of export products, at least temporar-
ily, and trade is stimulated.

Quantifying the Effect of Technology
on Trade

We have little quantitative information on the
influence of technical change on trade. Nearly ten
years ago, the Danish economist, Erik Hoffmeyer,
studied the pattern of U.S. trade and found that the

15

RICHARD N. COOPER is Professor of Economics at Yale University. Earlier, he
served for two years as Senior Staff Economist for the Council of Economic Ad-
visers, followed by two years as Assistant Professor of Economics at Yale. He then
returned to the U.S. Government on leave from Yale to become Deputy Assistant
Secretary of State for International Monetary Affairs prior to assuming his present
position.

A graduate of Oberlin College with his B.A. in 1956, Professor Cooper acquired
his degree of Master of Science in Economics in 1958 at the London School for
Economics and four years later his Doctorate from Harvard University.

Dr. Cooper's publications have treated the international aspects of technical
change and long term trends in trade and economic growth, as well as international
financial issues. He has addressed himself extensively to the competitive position of
the United States and to problems of national economic policy in an integrated
world economy.

United States tended to specialize in what he called
research-intensive goods. He found that U.S. exports
of these research-intensive goods increased twenty
times between the period just before World War I
and the mid-fifties, while exports of traditional
goods merely trebled.

More recently, several studies have shown that
there is a striking relationship between U.S. export
performance and several measurements we might
think are related to technical change.

Donald Keesing has found, for example, a very
high correlation, industry by industry, between re-
search and development expenditures in relation to
sales and the U.S. share of exports of manufactures
by all the OECD countries. The relationship between
U.S. export performance and share of industry em-
ployment occupied by scientists and engineers is
similarly high. The weight of the evidence leaves little
question that there is some relationship, at least for
the United States, between export performance and
industrial research and development.

This relationship deserves closer scrutiny. First, it
should not blind us to the impact of technical
change on more traditional forms of trade and,
second, we should not take for granted the direction
of causality in the relationship just noted.

As to the first point, the impact of technology is
clearly not limited to the generation of new products
which enter international trade. Our attention is
usually focused on these — the visible products, the
jet aircraft, the new computer, synthetic fibers, the
new drugs. But the influence of technology is far
more pervasive than that.

In addition to these product innovations, there
are also important process innovations, improve-
ments which lower the cost of producing and mov-
ing a wide variety of goods, including goods of the
traditional type. Examples of such cost-reducing im-
provements come to mind in concentrating metal
ores, producing steel, weaving cloth, harvesting grain,
raising chickens.

Some innovations have a double role. They in-
volve the new product and they lower costs in pro-
ducing traditional products. The sewing machine and
the mechanical reaper are now classic examples;
the machinery industry is replete with current exam-
ples.

Sometimes the so-called traditional products are
themselves improved through advances in technical
knowledge. Selective breeding has increased both
the yield and the quality of many agricultural prod-
ucts and has produced chickens and turkeys which

far surpass their scrawny ancestors in edibility.
Purity of refined metals has been increased. New
alloys have greatly increased the performance of
these metals, and so on through most products.

Furthermore, trade has been greatly encouraged
by the impact of technological change on the trans-
portation industry. The big change came in the 19th
century with the railroad and the steamship, but
these changes have not ceased. Ocean freight rates
continue to decline relative to the value of goods
shipped and large bulk carriers with specialized port
facilities will make profitable the movement of large
amounts of low value goods, many being the tradi-
tional products.

Air transport will come into range of an increas-
ing number of goods as air cargo methods improve.
International air freight rates have fallen twenty per
cent in the last decade while other prices were gen-
erally rising, and the trend will probably continue
downward.

It is worth recalling, however, that not all tech-
nological advances stimulate trade. Some of the ma-
jor developments have the opposite effect, as when
nylon largely replaced silk, or when the Haber
process permitted fixation of nitrogen from the air
and reduced dependence on natural deposits.

Such developments reduce dependence on geog-
raphy and substitute, as it were, technology for ge-
ography and climate, tending to lower imports.

For all these reasons, it is not possible to identify
the impact of technology on trade by focusing on a
short list of technologically visible goods. The im-
pact is much more general, operating on production
costs and- transport costs as well as producing new
products; and some improvements may inhibit rather
than stimulate trade.

In view of this it may be asked, however, why
on such measures as we have there is in fact such
a close relationship, at least for the United States,
between exports of certain goods and technological
inputs into those industries. This close relationship
has already been noted. I would suggest, however,
that it requires an interpretation somewhat different
from the one usually cited or implied. This latter
interpretation treats R and D expenditures as largely
autonomous, determined primarily, say, by govern-
ment concern for national defense. But much R and
D is itself responsive to commercial demands for
new products as incomes grow and for new labor-
saving techniques of production as wages increase
and labor becomes more expensive. Technical im-
provements tend to respond to the demands pri-

17

marily of the domestic market. Many of the resulting
improvements also stimulate exports, either by cre-
ating new products or by lowering the cost of existing
ones.

There is some evidence, at least within the elec-
tronics industry — I assume the same is true for
other industries — that those firms whose research
and development programs are geared toward com-
mercial application, rather than government con-
tract work, do much better, both in the home mar-
ket and in foreign markets, than is true of firms
whose research effort is oriented heavily toward spe-
cial requirements of government contracts. These
often involve very exacting requirements which dom-
nate cost considerations. For commercial applica-
tions, cost considerations are important.

A Few Countries Are the Primary Technical
Innovators

Domestic demand attracts private research, and
research success satisfies new market demands, both
at home and abroad. It is not surprising in view of
the relationship between the domestic market and
directed research, that the great majority of the in-
novations take place in half-a-dozen to a dozen
countries, and that among these the United States
plays a leading role.

Quite apart from the effect of size — the propor-
tion of Nobel Laureates in the last 15 years who have
been American corresponds roughly to the U.S. share
in free world industrial production, for instance —
there are two reasons for supposing that the United
States might generate a disproportionate share of
commercial innovations. The U.S. economy is on the
frontier of experience, as it were, in two respects:
first, per capita incomes are higher in the U.S. than
elsewhere and have continued so for a number of
years; second, closely related to that, wage rates
are substantially higher than elsewhere and are con-
tinuing to rise, so that American businessmen face
before others the need to find new labor-saving tech-
niques of production.

The first of these effects can be seen in a wide
range of consumer products which were first pro-
duced on a massive scale in the United States — au-
tomobiles, household appliances, telephones, hi-fi
sets, small boats, small aircraft. The potential de-
mand for such products not only generates improve-
ments in the products themselves, but also induces
improvements in productive techniques to service
the volume of demand and to bring the product
within the reach of the mass consumer a bit sooner.

High Labor Cost as a Stimulus to Innovation

The second effect can be seen in the long history of
U.S. innovations directed at the conservation of
labor, which has always been high cost relative to
other productive factors and which on some occa-
sions has simply not been available in the quantity
or quality required to satisfy domestic demand with
old techniques of production.

The sewing machine, the linotype machine, the
typewriter, shoe machinery, and down to data sorting
machinery and the computer are only the best known
of these labor-saving innovations.

Labor-saving innovations were often U.S. inven-
tions. The need drew creative attention to possible
solutions. Very often the inventions were made
elsewhere but first widely used in the United States,
where there was a wide receptivity to improvements
in techniques.

A typical illustration of the importance of receptiv-
ity as distinguished from just the generation of new
products is offered by the sewing machine, which in
a primitive but effective form was invented by a
Frenchmen, Thimonnier, sixteen years before Elias
Howe constructed his machine in the United States.
It was actually used to mass produce uniforms for
the French Army (an earlier example of government
support for innovation), but the Parisian tailors
formed mobs, smashed the machines, and forced
Thimonnier to flee to Paris. The labor-short U.S.
economy could not afford the luxury of foregoing
an important labor-saving device.

Resistance to technological improvement is not
absent today on either side of the Atlantic, but pre-
sumably it is not carried to the lengths of the Parisian
tailors. So long as labor costs are highest in the
United States, however, and are expected to rise
further, the incentive to devise new labor saving
techniques will be strongest there. As wages rise in
Europe and elsewhere around the world, business-
men there will be passing through a range of ex-
perience already passed in the United States, and
the possibility of borrowing labor-saving techniques
rather than having to generate them will be much
greater.

On both counts, high per capita incomes and
high and growing wage rates, innovation is there-
fore likely to be somewhat stronger in the United
States until incomes elsewhere and labor costs rise
to the U.S. level, a day that, at least for Europe, is
still some distance off, but is at least within sight.

The choice of technology available to less devel-
oped countries will be even wider and it is at present

18

_

a matter of considerable debate whether they should
in general adopt techniques now obsolete in the ma-
jor industrial nations but which are appropriate to
the availability and cost of labor in those countries,
or whether they should adopt the latest, most up-to-
date techniques even though they are labor labor-
saving.

The Stream of Innovations

Technological innovation can undoubtedly
strengthen the competitive position of a country in
which the innovation takes place, whether it be one
which enlarges exports or displaces imports. How-
ever, technological advantage in any one product is
transitory. Once a break-through has been made, the
new information is typically spread widely. Underly-
ing cost considerations will ultimately govern where
it will be produced and where it will be used.

For the impact on trade, we must look not to the
individual product (because of obsolescence it may
not even be marketable long enough for basic cost
considerations to come into play) but to the stream
of new products and processes, each one often re-
placing previous ones.

The advantage which accrues to a country's trad-
ing position depends both on the intensity of the
stream of innovations and on the rate at which new
knowledge is put into use elsewhere, where the basic
cost advantages lie.

Intensity of the stream is partly accidental, the
product of individual and uncoordinated inventive
effort, but it is increasingly the product of systematic
and coordinated application of talent and resources
to discovery.

What we may call the research and development
industry, programmed expenditures for the develop-
ment of new techniques and new products, absorbed
in the United States only two-tenths of one percent
of GNP in the early 1920's, but has grown to 2.8
percent of GNP in 1960 and must be three percent
today. Even excluding government financed research
and development, the expenditure grew sharply from
the '20's to over 1 percent of GNP for commercially
financed R&D today.

Business incentive to develop new products is
strong as the public with steadily increasing incomes
gets sated with the traditional necessities of fife.
Other countries have experienced a similarly rapid
growth of programmed R&D expenditures over the
same period.

Is Spill-Over a Significant Source of
Innovation?

Not all of these expenditures contribute to the
stream of commercially relevant innovations. Much
R&D expenditure, especially in France, Britain, and
the United States, is financed by the central govern-
ment in pursuit of national defense. There is a lively
debate about how important is the so-called spill-
over from this military research. There are a few
examples where military R&D has had clear com-
mercial application, such as the jet engine. In other
cases, military R&D has pioneered a field and led
to further development work aimed at the civilian
market. This was to some extent true of computers
which started on government contract.

But students of these spill-overs in the United
States find them to be surprisingly small. They are
difficult to quantify but it is noteworthy that in the
mid-fifties only four percent of all patent applica-
tions arose from defense contracts, even though the
Defense Department financed roughly half of the to-
tal U.S. R&D. Furthermore, commercial utilization
of private patents arising from government-financed
R & D is only thirteen percent, compared with
around sixty percent for patents arising from private
development work. One aerospace firm reported that
out of four hundred patent applications accumulated
by the end of the 1950's, only three had commercial
application.

Indeed, there is some concern in this country that
very large government R&D programs may actual-
ly reduce the stream of commercial innovations by
drawing away critical scientific and engineering tal-
ent into military and now space work to a greater
extent than the pool of such skills is augmented by
the attractions of these programs. Fewer men are
available for commercial research and development.

Finally, even when there are spill-overs, much
commercial R & D is often required to adapt them
to the commercial requirements. It has often been
firms other than those doing the military work which
have made the products commercially successful. As
noted above, export success, at least within some
industries, seems much more closely related to pri-
vately financed research and development expendi-
tures than to total research and development ex-
penditures.

International Diffusion of Technology

The intensity of the stream of innovation is only
one factor governing the trade advantage a country
gains from technological change. The second impor-

19

tant factor is the rate at which new knowledge is
diffused abroad. Unless the innovating country enjoys
a basic cost advantage in producing the new product,
its trade position is enhanced only to the extent that
there is a lag in time between its production of the
product and new production in other, lower cost
locations.

While the evidence we have is only fragmentary,
it does not seem as though the international diffusion
of new techniques of production or of new products
is much more rapid today than it has ever been in
the past.

The point is illustrated by the quip of a few years
ago which went, "In January, an American invents a
new product; in February, Tass announces that a
Russian had invented this product thirty years ago;
and by March, Japan is exporting the product to the
United States."

In times past, great efforts were taken to prevent
the diffusion of technological knowledge to preserve
monopoly for those with the specialized knowledge.
The secret of Tyrian purple was so tightly kept by
the Phoenicians that it was lost in the course of
time. England, seat of the industrial revolution, was
much aware of the advantage it gained by the new
machinery and took stringent measures in the 18th
and early 19th Century to prevent the export of ma-
chinery, especially of textile machinery. The export
prohibitions on capital goods were not finally re-
moved until 1843.

France had similar restrictions. Many Germans
were worried about the export of capital goods right
up to the eve of World War I out of fear that it
would undercut their markets.

Knowledge can be transmitted through emigration
as well as through the export of capital goods. The
first spinning mill in the United States was set up by
an Englishman, William Slater, in 1790, who had to
memorize the machine design before he emigrated.
Britain was very much aware of this possibility
and imposed heavy fines on skilled English workmen
who went abroad. Those who were abroad for more
than six months, despite notification from the British
Embassy to return, lost their British citizenship and
all their property was confiscated.

This kind of impediment to the movement of
knowledge was largely swept away by the free trade
sentiment of the 19th Century, and today such re-
strictions are generally limited to goods of military
application. Even without such deliberate imped-
iments to diffusion of technical improvements, diffu-
sion has been slow, but it has been accelerating. The

evidence we have is largely anecdotal, but as an
illustration consider the typewriter, which was in-
vented in the United States in 1868 and by the mid-
eighties had quite a large market in this country. It
first appears as a separate entry in U.S. export
statistics in 1897 with exports amounting to $1.4
million. A report of 1908, eleven years later, indi-
cates that American typewriting machines had only
German competitors in Europe. Actually by that
time there were also two British firms with exports
of $90,000, a negligible amount compared with U.S.
exports of %6 l /i million. Broadly speaking, it took
twenty years from the time of heavy marketing in
the U.S. to the time of modest exports by the few
leading competitors, Britain and Germany.

Compare this with more recent developments.
Within a year of the introduction of stainless steel
razor blades by Wilkinson Sword, a British firm,
several American firms had competing blades on the
market. This was a defensive response and it was
rapid. The inauguration of new techniques has only
been slightly less spectacular in other areas. Float
glass was produced in the United States only four
years after the pioneering production began in
England. Many computers have been produced in
Europe within a relatively few years after they were
first marketed in the United States.

Even where international trade is not directly in-
volved, new technology moves quickly. For instance,
U.S. firms introduced much more efficient methods
for generating electricity from coal in 1949. By
1956, seven years later, all new French generating
capacity incorporated the new technology and a sub-
stantial part of new British capacity did.

We have other indications of the rapid diffusion
of technical knowledge. One is the so-called interna-
tional patent crisis, where the number of cross-filings
has increased to such an extent that most national
patent offices are in heavy arrears in their work. A
second is the great expansion of patent licensing
across national frontiers. The United States alone
earned more than $ 1 billion from foreigners last year
in royalties, license fees, and management fees — ex-
ports of knowledge, disembodied from exports of
goods and even, in many cases, from exports of cap-
ital.

Finally, there has been a large and growing
amount of direct foreign investment abroad — the
creation of the multi-national firm. Such investment
tends to diffuse technical knowledge and manage-
ment skills as well as, or even perhaps more than,
capital.

20

Leads or Lags?

I will close by venturing some speculation on
these trends. In the first place, they offer some par-
tial explanation for the baffling conjunction of two
arguments, one on the eastern side of the Atlantic,
that the so-called technological lead of the United
States is increasing, and the other on this side of the
Atlantic, and with some vigor only a few years ago,
that the U.S. competitive position in world markets
is being weakened because of a diminution in tech-
nological lead. In fact, both arguments probably
represent unwarranted generalizations from particu-
lar examples and, of course, both tendencies can be
observed simultaneously by looking at different in-
dustries.

A more sophisticated reconciliation would refer to
the two basic dimensions that I have just been dis-
cussing. The intensity of the stream of innovations
from the United States may have increased — we still
await evidence on whether that is actually so — but
at the same time, the rate of diffusion of this knowl-
edge to other countries has also increased. From the
viewpoint of competitiveness in international trade,
it is the product of these two factors which is im-
portant, neither one alone.

Speculating on the Future Basis of Trade

The very rapid diffusion of new technological
knowledge along with the great accumulation of

capital which is taking place in most countries sug-
gests a deeper irony. It is that most large countries
will become more alike over the course of time in
their structure of production and levels of income,
and they can become economically more self-suffi-
cient. The basis for trade among them will be under-
cut. There is already some evidence that most West-
ern countries do look more alike in the structure of
their production, particularly in manufacturing pro-
duction, than they did in the past.

Trade has certainly not diminished among these
countries, even relative to output, but even while
technological change throws up new products for
trade, rapid diffusion of this knowledge reduces the
underlying basis for trade.

One can even speculate — idly, for most of us —
that in the course of time there will be a swingback
in relative importance to the traditional trade with
which we started out — trade in food and raw ma-
terials, whose production costs are rooted in climate
and natural endowments — while advances in tech-
nology and rapid dissemination of new knowledge
permit many countries or small groups of countries
to produce their own requirements of the other com-
modities or services.

Perhaps this is one of those historical reversals to
which Professor McLuhan has referred, like the
complete cycle from a tailor-made service economy
through mass production and back again.

21

Dr. Seitz: Thank you very much, Professor Cooper.
Now, we will begin the discussion period and I would
first like to call on two formal discussants. The first
is Dr. Hendrik Casimir, Director of the Research
Laboratories of the Philips Industries of Holland.

Dr. Casimir: I am not certain that the remarks I am
going to make relate directly to what the two
speakers have said, but I should like to make a few
comments on the role of basic science in technology.

Fundamental science is and should be an aim in
itself. It is one of the most noble endeavors of man-
kind to discover curious facts, to relate the appar-
ently unrelated, to build abstract edifices of theory,
to probe the universe as astronomers do, and to
probe the smallest particles as the high-energy phys-
icists do.

It creates a beauty, an understanding and har-
mony. One doesn't perhaps go so far as Heinrich
Hertz, who, when working on his thesis, said to his
mother: "Poor mother. What a pity that this type of
beauty will forever remain a closed book to you."
Had I said this to my mother while working on my
thesis, she would have said, "Oh, yes, you are a
dear little boy, but don't talk such ridiculous non-
sense." But then she was a very wise woman. It
happens, however, that this basic science provides
increasingly the tools without which entrepreneurs
and inventors and innovators would be completely
helpless and without effect.

The Debt of Technology to Basic Science

I have heard statements that the role of academic
research in innovation is slight. It is about the most
blatant piece of nonsense it has been my fortune to
stumble upon.

Certainly, one might speculate idly whether tran-
sistors might have been discovered by people who
had not been trained in and had not contributed to
wave mechanics or the theory of electrons in solids.
It so happened that inventors of transistors were
versed in and contributed to the quantum theory of
solids.

One might ask whether basic circuits in com-
puters might have been found by people who want-
ed to build computers. As it happens, they were dis-
covered in the thirties by physicists dealing with the
counting of nuclear particles because they were in-
terested in nuclear physics.

One might ask whether there would be nuclear
power because people wanted new power sources or
whether the urge to have new power would have led
to the discovery of the nucleus. Perhaps — only it
didn't happen that way, and there were the Curies
and Rutherford and Fermi and a few others.

One might ask whether an electronic industry
might exist without the previous discovery of elec-
trons by people like Thomson and H. A. Lorentz.
Again, it didn't happen.

One might ask even whether induction coils in
motor cars might have been made by enterprises
which wanted to make motor transport and whether
then they would have stumbled on the laws of in-
duction. But the laws of induction had been found
by Faraday many decades before that.

Or whether, in an urge to provide better com-
munication, one might have found electromagnetic
waves. They weren't found that way. They were
found by Hertz who emphasized the beauty of phys-
ics and who based his work on the theoretical con-
sideration of Maxwell. I think there is hardly any
example of twentieth century innovation which is
not indebted in this way to basic scientific thought.

Basic Science Awaits Use by the Entrepreneur

I am quite certain that sooner or later the work
that is now going on in high-energy physics, on
problems like parity conservation and the eight-fold
way and the theory of unitary groups and so on,
will in some way or other lead people of enterprising
mentality and of inventive skill to come forward
with entirely new branches of technology.

These basic aspects of science are common prop-
erty. They are available to the whole world, for
everyone who wants to study them, and by the time
they are being used they are usually condensed in
excellent textbooks and manuals. You don't have to
repeat these studies to be able to reap the harvest,
but one must have certain powers of absorption.
One may ask whether these can be obtained, can be
present to a sufficient degree without some involve-
ment in the scientific field.

22

HENDRIK BRUGT GERHARD CASIMIR is Director of Research Laboratories
for the N. V. Philips Industries of Holland. Concurrently, he serves as a member
of the Advisory Council for Science Policy of the Dutch Ministry of Education and
Sciences, The Hague. He is currently in the United States as a member of the
Team of Examiners of U.S. Science Policy for the Organization for Economic
Cooperation and Development.

He has been with the Phillips organization since 1942, assuming his present
position in 1946 after four years of research in physics. Preceding this, he was for
ten years Professor of Natural Science at the University of Ley den.

Dr. Casimir, a native of The Hague (1909), studied theoretical physics at Ley-
den with Ehrenfest, at Copenhagen with Niels Bohr, and at Zurich with Pauli. He
was awarded his Doctoral Degrees in Mathematics and Natural Sciences by the
Universities of Ley den and Copenhagen. Dr. Casimir is the author of numerous
publications in the fields of theoretical physics, applied mathematics and low tem-
perature physics.

The Tie Between Scientific Competence and
Economic Development

The case of Japan was mentioned. It is true they
went into transistors without very large investments
in solid state research, but in my view their pro-
ficiency in absorbing knowledge is not entirely un-
related to the fact that Japan, after all, produced two
Nobel Prize winners in physics and a number of
other leaders in research.

It has something to do with the fact that Japan
before the World War pioneered in certain magnet-
ic materials. It has to do with the fact that on the
roofs of our houses we find television antennas of
the Yagi type, invented by Professor Yagi in Japan.
He was a man who encouraged Yukawa not to
study atoms but nuclei, and so Yukawa was led into
the study of nuclear forces. This indirect route made
him not only the winner of a Nobel Prize, but also
the originator and father of high energy physics.
And it has something to do with the fact that, at
present, in the Japanese school of theoretical solid
state physics, a man like Kubo is dominating parts
of the field. Is this mysticism? You will have a hard
time to convince me that this is a myth that. should
be broken. I might conclude with one or two ex-
amples from my own country which show that
proficiency in certain research may not lead to tech-

nological and commercial results, without the sup-
port of sufficient enterprise, but that in another way
it still has certain influence in the whole picture.

Let's take three cases of Dutch Nobel Prize win-
ners: Kamerling Onnes, who liquefied helium and
discovered superconductivity. It did not lead to an
immediate development of cryogenic industries in
the Netherlands. It didn't give us — even though the
primary logical circuits were also made in Holland
in the thirties — it did not give us a great advance
toward launching a cryogenic computer. Technology
and industry weren't right for that. Yet when in
Holland one decided to tackle certain aspects of
cryogenic engineering, the existence of this tradition
helped us quite considerably.

The fact that electrocardiography was discovered
in the Netherlands did not lead at once to a great
business in electromedical equipment. Yet the fact
that there was a general level of medical research
contributed to the fact that Holland now exports a
lot of x-ray equipment to other countries.

The invention of the phase contrast electron-mi-
croscope by Zernike did not lead to a great manu-
facturing enterprise for such microscopes. Still, it is
in my opinion related to the existence of a pros-
perous optical industry in the Netherlands.

These are the few remarks I wanted to make and
which perhaps can be contributions to the discussions
of today and tomorrow.

24

Dr. Seitz: Our next formal discussant is Dr. John E.
Reynolds, who is advisor to the Division of Inter-
national Finance for the Board of Governors of the
Federal Reserve System in Washington, D. C.

Dr. Reynolds: I think it is important that we give
the audience a chance; therefore, I will try to be
very brief indeed. Perhaps the most useful thing I
can do is to note the one or two of the points at
which it seems to me the different remarks we have
heard this morning bear upon each other.

Seeing Things as a Whole

One of Professor McLuhan's themes is that the
new technology, the electronic or the information
technology, enables us to see things whole; indeed, it
compels us to see things whole. We have to take
refuge from information overload in something he
calls pattern recognition.

I think throughout all the major speeches of this
morning has run the thread of "having to see things
whole" in analyzing the role of technology in world
trade. I see this in at least three different aspects.

Learning to Use Technology

First, that we have to have a sense of history; that
we have to see a time continuum, and recognize that
the past is linked with the present and that with the
future. Both Secretary Connor and Dr. Seitz remind-
ed us that man has had technology as long as we
have any record of his existence. Technology and
trade have been the essence, really, of our whole
rise from the cave up to our present state of life.

And while, as Professor Cooper says, economists
will differ on whether it has contributed one-fifth or
three-fifths of our progress — depending on how they
allow for education — still that's where economic
growth comes from — technology. While we perhaps
can't measure it quantitatively, we know that it is so
and we recognize the success in the adaptation to
and the exploitation of technology to meet human
needs.

I think we haven't made a quantum jump into a
brand new kind of world with our new technology,
but we have a long experience of making use of tech-
nology. Our pace may be faster now than before, so
that we have to learn to adapt ourselves faster than
before or run greater risks of not adapting, but we
can still learn from the past. Economists who plot
growth rates find that they are faster now than they
were- — but it is four percent per year instead of
three, or perhaps four-and-a-half percent instead of
three, rather than some brand new order of rate of
change that we are experiencing.

The Characteristics of Trade and Investment

A second way in which it seems to me we need to
see things whole — and this, too, was stressed by sev-
eral of the speakers — is that international trade and
investment are really only aspects of or extensions
of trade and investment as a whole. Economists may
be partly to blame for having made the study of
international trade such a very special thing as if an
export were quite a different thing from ordinary
shipments say from Buffalo, New York, to Atlanta,
Georgia. They are very similar things, and while na-
tional boundaries are there and matter — matter very
much to lawyers, matter very much, too, for certain
tax purposes and so on — still the essence of the way
in which technology contributes to the quality of life
is quite general and can't be viewed as different in
its international trade and investment aspects than in
domestic trade and investment aspects.

Viewing Economics Globally

Finally, I think Mr. McLuhan has impressed
upon us that the world has become really a global-
sized village and we can't so readily take partial and
private viewpoints of the needs of the world. We
have to think, really, of the thing as a whole, now.
We are doing that more and more, and one reason
we have moved ahead rather successfully in an eco-
nomic and technologic way during the two decades
since World War II is that we have been taking an
over-all view. It is true in the field in which I work,
international economic policy; and, incidentally, I
think that the extent to which we profit by tech-
nological advance is importantly conditioned by
whether we follow sensible or foolish economic poli-
cies.

People talk of competitiveness, but you can't talk
of that in technological terms alone; it has to do
with prices and exchange rates as well as with physi-
cal characteristics of processes. The OECD has been

25

JOHN E. REYNOLDS is presently principal Advisor to the Division of Interna-
tional Finance of the Board of Governors of the Federal Reserve System. He was
for two years Staff Director of the Review Committee for Balance of Payments
Statistics, more familiarly known as the Bernstein Committee. He joined the Staff
of the Federal Reserve Board in 1953 following three years with the Bank for
International Settlements in Geneva, Switzerland where he served under Per Jacob-
son in the Monetary and Economic Department.

Mr. Reynolds studied Economics at Harvard University, receiving his Bachelor's
degree in 1944 and his Master's in 1950.

mentioned. It is very encouraging that people go
regularly from all over the developed world to meet-
ings in Paris of the OECD to consider together how
they may jointly improve their policies towards the
development of technology and also their economic
policies which bear on the rate at which technology
can be usefully applied. The very days of this Sym-
posium are also days for another round of meetings
for the OECD Science Policy and Economic Policy
Committees.

Professor Cooper mentioned two reasons for the
very rapid expansion of world trade in recent years,
two among several. One, that trade barriers have
been lowered, and, two that the pace of tech-
nological innovation has been rapid. These two in-
teract very much. We have had to lower the trade
barriers in order to take advantage of the technology
and, conversely, by lowering the trade barriers, we
have broadened the scope of beneficiaries from tech-
nology. I agree with the Secretary, most heartily,
that the main task for all of us is to keep things free
and remove obstacles, as much as possible.

Can We Learn to Transfer Technology Across
the Equator?

There is a tendency to focus on the problems of
flow of information and technological gaps mainly
across the Atlantic, whereas in my view, the prob-
lems are much less serious across the Atlantic
than they are across the Equator. I hope at some
point during this meeting that people will take a
good hard look at the problem of how you transmit
technology from highly developed countries to less
developed countries. The challenge is that this needs
to be done with none of the long experience we have
had and needed in building up stable governments
with some support from scholastic research experi-
ence. Looking back from fifty years from now, the
real test of our times will have been not whether we
have got along well across the Atlantic, but whether
we were able to transmit to the much poorer coun-
tries of the Southern Hemisphere the means of mak-
ing progress.

W&SSSSSSSS&r&Z

QUESTIONS FROM THE FLOOR

Dr. Seitz: The session is now open for questions or
comments. Does anyone wish to start?

Dr. Melville Green (NBS): I was much stimulated
by Professor McLuhan's talk. He has ways of de-
scribing patterns by which we can try to understand
our current civilization and the one that is rapidly
bearing down on us.

However, some of his patterns seem to be some-
what contradictory and I wanted to ask him to clar-
ify. In particular, he was discussing our young peo-
ple and he said that they are learning by discovering
rather than by sitting in a classroom and being
taught.

The image is of a more active pursuit of knowl-
edge. This was reinforced by his image of the
hunter. However, toward the end of his talk he men-
tioned that we all seem to be turning into television
screens and becoming more oriental and perhaps
more passive.

I would like him to comment on what seems to
me a contradiction, or perhaps one shouldn't at this

stage of the game look for consistency but rather as
in modern physics, find complementarity.

Professor McLuhan: Yes, I wished to indicate that
the coming pattern in education is moving away
from instruction toward discovery, just as in busi-
ness and other organizations generally, people want
more involvement. It doesn't matter what the age
group or the operation is. In the same way, children
today, in their new electric environment, have come
to expect much more involvement in the decision-
making and in the learning process.

I don't say we have done anything about this. I
didn't wish to indicate that anything has been done
about this. Nothing has been done. But the children
are sitting there waiting to be involved in the proc-
ess of discovery by being sent out into the society in
small teams to do research, to discover and thereby
learn.

Professor Oppenheimer used to say, "There are
kids playing here on the sidewalk that can solve
some of my toughest problems in physics because

256-707 0-67 — 3

27

they have modes of perception that I lost forty years
ago." The idea that you can use children in high
level research is not something we are doing any-
thing about. No. It is just a coming possibility, that's
all.

The other matter of TV screens refers, not to pas-
sivity, but to the exact opposite. TV is a profoundly
involving medium because it takes us inside our-
selves actively and inquisitively on a kind of a trip,
as it were. LSD and TV are closely related. LSD is
merely a physiological analogue to TV, and the
craze for LSD is nourished by the TV screen. The
TV screen is not the movie screen, it has nothing to
do with the old movie camera technique. You see,
the movie camera extends the eye and takes you out
into the environment. TV does the exact opposite. It
takes you inside yourself.

Existentialism, which came along with electric cir-
cuitry, began with this interior trip into the darkness
of our own being. Kierkegaard and Sartre and such
people are all part of the western movement in-
wards, for the investigation of the new frontier.
Paradoxically, the new interior trip is unique and
singular, is not mass produced; people go on talking
about mass production and mass education without
noticing that they each now have the exactly oppo-
site character. For the young people in our world
today, movement is toward the unique and the sin-
gular and away from the mass produced and the
general.

So the points that were raised by your question
are typical of just how difficult it is to discuss the
matters that are part of our current environment. It
is much easier to discuss the old rear view mirror
image than it is to tackle what is right under your
nose. It is very difficult to discuss the present. I have
a friend who says the future of the future is the
present. True, but the difficulty is to see the present.
Very difficult.

Dr. Seitz: Another question?

Professor Rao: We have heard, at this meeting and
others, discussion of the effects of science and tech-
nology on international dealing and investments. I
would like to suggest that the effect of technology in
the last twenty years has hardly been sensed in the
developing countries as far as their international
trade or even their national income is concerned.

What has been the effect of technology and
science on the exports of developing countries? How
far has it reduced their external dependence? How

far has it reduced the gap between their national
income and that of other nations? Japan has had a
remarkable experience, but other nations have not. I
think it would be very good if some research were to
be done on that subject and I hope that this sympo-
sium and others to follow will deal with that. Should
we not deal also with the more effective utilization
of the resources already available in developing
countries rather than weakening those needs and de-
mands by displacing those resources by synthetics
and technological substitutes, for example?

Dr. Seitz: The question, as I think all of you heard,
is about what the effect of the technological develop-
ments, since World War II, upon the developing
countries, treating Japan as somewhat of an excep-
tion. To what extent have these countries been
helped or hindered? Moreover, to what extent has
the development of such things as synthetic textiles
had a deleterious effect in the natural fiber industries
of the developing countries?

I wonder if one of the panelists would care to
speak to this. Professor Cooper?

Professor Cooper: I agree very much with Dr. Rao
that we need careful study of this question. I would
not, as a preliminary hypothesis, start out with the
view that the impact of science and technology has
been nil or close to nil.

It is true that the great growth in trade in prod-
ucts having a high technological content has pre-
dominantly been among industrial countries, leaving
aside, as he did, the export of capital goods to the
less developed countries.

Most of this vast growth of trade has taken place
among the industrial countries and the less devel-
oped countries have been in a kind of a backwater.
Still, one can point to numerous examples where ad-
vances in technology have contributed to the foreign
exchange earnings, the additional receipts, of less de-
veloped countries. Things come to mind like the
greatly improved strains of rubber which are now
being produced and exported from Malaya, the de-
velopment of new and lower grade sources of metal-
lic ores which due to improvements in the concen-
tration process and reduction in the cost of bulk
transport permit earnings from what only a few
years ago was regarded as worthless dirt. Develop-
ments in transportation, refrigeration, have stimulat-
ed the whole banana industry.

What is striking about the examples that I have
given is that they all focus on primary products and

28

not on manufactured products. What has happened
is that the growth in exports by the less developed
countries has been in products with quite a low
technological content. It would be useful to have
much more detailed scrutiny of why it is that these
tremendous improvements in available technology
have been left relatively to one side in the less devel-
oped countries and have not affected their manufac-
turing operations much.

Dr. Seitz: Any other comments? A question over
here.

Mr. Charles Vetter (United States Information
Agency) : As prompted by Mr. Reynolds' discus-
sion, I'd like to hear a comment on barriers to the
movement of knowledge across the Equator. Are
these barriers attitudinal, motivational, conceptual?

We see the same barriers domestically in the ur-
ban problems that we have. There seems also to be
a parallel between the problems between cultures
within our own country, like Appalachia or the ur-
ban slum area, and the problems of international
movement of trade and technology.

I would like very much to hear Mr. McLuhan's
comments on means for influencing the attitudes
that are the barriers and perhaps on how technology
can be more effective in our training systems for
people who are promoting the movements of ideas.

Dr. McLuhan: Well, sir, that's a big order. It has
been the traditional function of the arts to train our
perception. The artist is the only person who can
look at the present, at new environments without
fear, and can report what he sees by new patterns
and new styles.

The artist has training in perception rather than a
blood bank or store of values. Pop art today, for
example, is attempting to tell us what our environ-
ment itself is — the environment itself has become an
art form.

But the training of perception in regard to new
technologies and their effects has never been under-
taken, except indirectly by the artist. Someone said
once, "We don't know who discovered water but we
are pretty sure it wasn't a fish!" We are all in this
position, being surrounded by some environment or
element that blinds us totally; the message of the
fish theme is a very important one, and just how to
get through to people that way is quite a problem.

We have from the moment of birth a fear of the
new environment. We always prefer the old one. We

learn by going from the familiar to the unfamiliar.
In practice, this means whenever we account for the
unfamiliar, we translate it instantly into something
we already know. In other words, we refuse to look
at the unfamiliar. Our built-in mechanisms of cogni-
tion seem to make it impossible for us to recognize
the new until we have translated it into the old.

Now there is a technique for discovering the new
in spite of our built-in pattern map, and that is by
inventory. If you make an inventory of all the effects
of the telephone or radio on a society, you will dis-
cover a pattern. You have seen the transistor radios
teaching children to make their own space bubbles
for privacy. Our kids don't listen to radios; they use
them as space bubbles for privacy. This has never
been studied, but the radio, the use of radio as space
in the space age is the type of thing that is having
tremendous effect on the lives of the young. You
can study these effects by inventory, what effect it
has on clothing, on cars, on schooling and so on. It
is very difficult to study them by any single concept
or point of view.

These inventories yield awareness of new forms
that you couldn't get by any other means. This is
also where the young can enter the field of research.
The young are very good at making inventories of
their surroundings; they can become hunters by
roaming the evironment, and at the same time get-
ting smart.

Dr. Seitz: I think we have another question here.

Dr. Melville Green (NBS): Professor McLuhan
brought before this conference the idea of myths —
myths as a spring of action.

Dr. Seitz and Dr. Casimir later on referred to
myth in the relationship of classical technology to
science. We heard about the myths of technology in
developing countries. Myths seem more useful than
we may wish to admit. Perhaps what is necessary is
a truer understanding of the positive role of myths.

Dr. McLuhan: The word myth is the Greek word
for work. Mythos is a work, and is considered a
breakthrough. Mythos has a way of explaining some
event. The myth is a way of explaining a complex
process in a few phrases. As a technique of explana-
tion of cause and effect, it is coming back into much
use. Many of the things we call natural laws or ways
of describing events are in the old Greek sense of
the word, myths.

29

There is a phrase, "Every breakdown is a break-
through." This is a mythic form of awareness. Every
breakdown is a breakthrough, whether it is in pri-
vate life or in a corporate organization. Whenever
you break down, you have just encountered a very
rich untapped potential which creates a new form.

Dr. Seitz: Near the rear?

Comment: It seems to me the discussion this morn-
ing points up a fact which is overlooked in the ap-
plication of technology in international trade. Be-
cause we are working in a computer age with things
happening at electronic speed, we expect everything
to happen both nationally and internationally at
computer speed.

It is evident to many of us that in the applications
of science and technology in industry that, some
twenty years after the end of World War II, we are
just beginning to apply many of the outgrowths of
military research.

Dr. Casimir has beautifully pointed out that the
application of fundamental research has taken any-
where from ten to seventy years before it found util-
ity in engineering practice or application.

We are very impatient to expect that the rapidly
developing technology is going to be exported and
accepted to produce great forward strides in unde-
veloped countries immediately.

We have to recognize that in these affairs there is
a time lag, that the precursor conditions of educa-
tion, of acceptance of technical ideas and the ability
to use them, have got to come first. When they do,
then the applications of technology based on funda-
mental research in the more technologically ad-
vanced countries will find a fertile ground. There
will be seeds that will be planted, will grow, and will

increase the potentials of the undeveloped countries
to have international trade in technological com-
modities.

Mr. Reynolds: I would like to add just one thing to
that. I think too that the international diffusion of
technology depends very much on the ability of the
relevant people in each country to be able to recog-
nize breakthroughs when they occur, and to adapt
them to local requirements. This requires a substan-
tial base of technologically alert people.

One can draw a distinction here, between those
who are actually generating new ideas, new products
or new processes and those who are very quick at
recognizing the useful developments of others. The
second is very necessary.

One of the developments which has taken place is
the tremendous growth of study abroad, especially
in science and engineering and some of the social
sciences. Students converge from all around the
world on American and Western European universi-
ties, and this will in the course of time create this
body of people who can receive and identify, recog-
nize and adapt innovations that take place else-
where.

One of the disturbing results that we have recent-
ly observed is that the rate of return of many people
from less developed countries from Western Europe
and North America to their homeland, is in some
cases strikingly low. This process of education
abroad at least to some extent robs these countries
of some of their best talent. But there is some re-
turn. It varies a lot from country to country and I
think we should work toward getting it up.

Dr. Seitz: Thank you. This morning's session is now
ended and we shall adjourn for lunch.

30

Luncheon Program

Introduction:

Mr. Herman Pollack

Director of International Scientific and Technological
Affairs, Department of State

Mr. Pollack: Mr. Secretary and distinguished guests.

The prospects and problems associated with the
development of technological capability and the
movement of technology among nations are now the
object of serious attention in many countries
throughout the world. I am sure, therefore, that the
discussion under way here at this great and venture-
some symposium will be followed with great interest
by an international audience of governmental, indus-
trial and business leaders.

The need for a better understanding of and more
factual data on these subjects is abundantly clear.
This symposium and others that will undoubtedly
follow will do much to illuminate and clarify this
most complicated topic. I think you will agree that
we have witnessed a splendid beginning today to
what I am convinced will be recalled in subsequent
years as a landmark meeting.

The locale for such a meeting could not be more
appropriate. From its beginnings at the turn of the
century, the Bureau of Standards has recognized the

need for international understandings and agree-
ments in the area of technology and standards. The
Bureau has been a pioneer in projecting the United
States into international scientific and technical co-
operation, and I think these hew laboratories are
ample evidence that the Bureau does not intend to
rest on its laurels.

Along the way, the Bureau has made many
friends in many lands, and those here today have
come from many lands. Among them is our speaker
at this luncheon, Mr. Pierre Uri. He is both a phi-
losopher and an economist, and I think perhaps the
combination and the marriage of these two disci-
plines provides insights very useful to the subject
that we are here to consider.

It is an honor and a great personal pleasure to
introduce to you one of France's most brilliant citi-
zens and a man who I am sure will be identified
with the future development of European unity, Mr.
Pierre Uri, Counselor for Studies of the Atlantic In-
stitute.

31

HERMAN POLLACK is Director of International Scientific and Technological
Affairs for the U.S. Department of State. During his 25 year career in the Federal
Government, he first served in a variety of assignments in the Office of Price
Administration. Following a period in the U.S. Army, he was with the War Ship-
ping Administration and the Foreign Economic Administration. He began his serv-
ice with the Department of State in 1946, holding positions as Deputy and Acting
Executive Director, Bureau of European Affairs; Executive Assistant, Office of the
Assistant Secretary for Administration; Director of the Management Staff; and
Deputy Assistant Secretary of Personnel.

A native of New York City (1919), Mr. Pollack is a graduate of the City
College of New York, and holds a Master's Degree from George Washington Uni-
versity.

i .

PIERRE URI has made many important contributions to French economic policy
and to the creation of the European Economic Community. As Economic and
Financial Adviser to the French Planning Commission under Jean Monnet, he set
up the first French economic budget in 1947. He was active in the conception and
negotiation of the Schuman Plan and had an important role in launching the Coal
and Steel Community. He then made the plans for the Common Market by prepar-
ing and writing the Brussels or Spaak Report, which served as a basis for the
Rome Treaties.

He was a member of the committee which in J 948 produced the report on
National and International Measures for Full Employment, and in 1957 he was
consultant to EC LA on a Common Market for Latin America. He has, as well,
served as a member of two ad hoc committees of the Alliance for Progress.

He chaired the group which produced the 1958 Report on the Economic Situa-
tion of the European Community, and then was Chairman of the group of experts
which studied long term development prospects in the Common Market. Among
his books, one may cite Partnership for Progress (Dialogue des Continents), A
Monetary Policy for Latin America, and just published, That We May Govern
(Pour Gouverner).

At present he is Counselor for Studies of the Atlantic Institute in Paris.

Speaker: Mr. Pierre Uri

Counselor for Studies, Atlantic Institute, Paris, France

Address: International Competition and Cooperation in Technology

Mr. Uri: Thank you, Mr. Pollack.

We have been told this morning that we are in a
world of accelerating technical progress, that we are
witnessing some new patterns of trade. The question
to which we have to address ourselves now is how
far this change in environment should lead to cer-
tain changes in our traditional views of policies. We
might only be in need of some adjustments in tradi-
tional economic theory, because the old pattern of
competitive advantage seems now to yield to the
very fact that there are now people with advanced
production of something which the others can't
produce, and that's the most absolute advantage
which you can think of.

This doesn't necessarily make for one-way trade
because, as has been pointed out, this technology
can be learned, and can lead to a reverse trade when
it has been learned by people who have lower
wages. In other words, the way trade is now work-
ing is by innovation, then imitation, and finally the
reverse trade.

Now, we know that this is not new. We have been
told of the technological advance of Phoenicia and
of China in the old days, but probably it is now a
bit broader than it use to be, and people begin to
be a bit jealous of the ones who have an advance on
this. Let us be quite clear. It doesn't take technical
advance to balance one's accounts and the United
States is the witness to that. But it means simply
you can balance your external account with a higher
standard of living.

The Technological Gap and Its Influence on
Trade

If, as some people maintain, there is a tech-
nological gap, let's not complain about it. If it did
not exist, the worries of our host, Secretary of Com-
merce Connor, about the balance of payments might
be even worse. The real question now before us is
whether this inequality, if any, is going to be in-
creased or whether there are appropriate policies so
that the whole world may benefit.

Measures of Influence of Technology on Trade

One point is immediately clear. It is very often
maintained that the balance of sales and purchases

of licenses might be a good indicator. I submit that
any country, except the largest one, is bound to
have a deficit on this. What is the probability that a
small country could invent by itself as much as the
rest of the world? And there is another way not to
have a deficit, and that is not to buy any license. On
this basis, the fact that some of our countries have
deficits on licenses is just a sign that they are inter-
ested in technical progress and this is all for the
good.

But there is another feature which I think is inter-
esting to mention. Usually when speaking about
conditions of international competition, it is mostly
relative magnitudes which matter. In other words, in
relation to the cost of a product, how scarce is capi-
tal and how scarce is labor?

And maybe with the great knowledge resulting
from research, particularly applied research, the ab-
solute magnitudes matter. In other words, if you
have to produce something which is completely new,
there is a threshold below which you won't be able
to achieve anything, and I think that this is the real-
ly new feature which the advance of technology
brings into the field of international trade.

Technological "Fallout"

Now there is another idea which I think is current
but of which we haven't yet drawn all the possible
consequences. We all admit that there is so-called
technological fallout, meaning by that that the re-
search conducted in one sector spreads to others be-
cause a lot has to be learned, and orders have to be
placed, and so forth, thus there is a certain cumula-
tive effect from research and development. To some
extent, and within reasonable limits, doing the job
oneself has more profound effect than purely im-
porting the recipes.

In other words, in a world of that kind, we can
no more think purely of competitive advantage, and
we have got to think ahead to potential capabilities
of developing one day something for which one
hasn't yet the start, and to the cumulative effect
which may accrue. This is a rather important ele-
ment which I think reflects even on present interna-
tional negotiations. I have read somewhere, and I
wouldn't disagree, that the famous eighty percent

34

clause of the Trade Expansion Act was a very clever
American idea, because, mind you, the products on
which most of the world's exports are concentrated
in the North Atlantic area are really science-based
products.

But the question is whether there wouldn't be a
certain case at the beginning for the countries which
are less advanced to use the infant industry argu-
ment and have some temporary protection, so that
they can reap the benefits of things which they will
do by themselves.

Foreign Investment Policy

But the reverse side of this possibility should be a
completely open policy on their part on foreign in-
vestment, because you are not going to have it both
ways. If you want to protect yourself for a certain
time against imported products because otherwise
you might never be able to develop them, then you
cannot protect yourself at the same time against the
firm which brings the technology with it, giving you
the possibility of fully using the new techniques and
filling the market.

And I am happy to say that the problem of inter-
national investment, which seemed to be a rather
hot issue when the Atlantic Institute undertook a
study of it, is now slowly cooling off. Even the gov-
ernment of my country seems to have been con-
vinced by the arguments presented by people who
don't belong to the majority. And the points which
are now being made are very reasonable ones, that
the subsidiary of a foreign company must be free to
export as is the interest of the host country; that
there must be no discrimination in the high level
jobs between the nationals of the country of origin
and nationals of the host country; and finally, and
this is probably the easiest thing to say but the most
difficult thing to conceive, that the host country
should be fully associated with research. I venture
to submit that if this symposium could try and de-
vise some of the criteria according to which some of
the research could be done in the host country, that
would serve a terribly useful purpose.

But, obviously, the real answer to our problem
lies in what the countries which feel that they are
less advanced do to restore the balance.

Advanced Technology and Economic Progress

On this, there is one remark which I haven't
heard often enough: there is no direct correlation
between the efforts on advanced technology and the
overall rate of economic progress. In other words, it

is not enough to do everything to make up for the
lag by concentrating on advanced technology. There
must be a balance. It depends, of course, on the
orientation of the research, and it is a moot problem
how far military technology has civilian spillover.
There is also the risk that by investing in a certain
direction, you practically dis-invest in others.

And I am afraid that there are some European
countries which have made very courageous efforts
and have been frustrated, because what it takes is
also the management to exploit research and the size
of the market to develop it, which means practically
that in the European countries that are complaining,
the remedy is in their hands.

Cooperative Efforts

It is the basis on which technological cooperation
can be organized to be a match to the United States.
Now, there are plenty of attempts at cooperation
and I have read that there are even now at inter-
national or regional levels about three hundred in-
ternational organizations; I'm sure you could not re-
cite the list.

But it is not enough to say that things are done
jointly. The important thing is how are they done. Is
it going to be done on a case-by-case basis, negotia-
ted, revised, finally in some cases abandoned? This
doesn't create the new environment. Is it going to be
done by allocating to one industry this, and to an-
other industry that, so that practically everybody
gets back the money which he just put in the pot?
This doesn't create either the , conditions for real
progress. If Europe is to do something and if the
notion evoked by the British of the technological
community means anything, it should be the agreed
principle that any new development, any new in-
dustry, any new product is not started on a national,
but on a common basis.

Of course, there is one difficulty which we can't
overlook, which is that, according to products, not
necessarily the same countries are interested or can
contribute. In other words, what it might mean —
and I venture it as a firm proposal — would be an
agreed option of a right of first refusal for those
interested countries to join in a product if they can
contribute something, and this should be done on as
broad a basis as possible.

Up to now, let's be frank, most international co-
operation in technological ventures has occurred in
a spirit of competition. Two countries come together
to beat a third one. We could quote an infinite
number of those attempts. I'm sure everybody rec-

35

ognizes that this is not the soundest possible eco-
nomics.

Commonalities and Equalities

Let's begin to conceive of real international
projects. I'm sure there will come a day when we
will really wonder that a race to the moon or the
exploration of the deep earth could be considered as
something other than a project for the whole of
mankind because, after all, this is our common earth
and this is our common universe. On this common
earth, there is one fact which we have got now to
face. It is the fact that whereas in our own society
we are all trying to have more equality of a basic
sort and more equality of opportunity, we are on the
contrary faced with the risk of growing inequality
between nations, in power, in standard of life, and
maybe even in the development of culture.

Well, civilization might be defined as the refusal
of natural inequality of the more brutal sort, and
what we have done in our society is to refuse brute
force so that other values may emerge. This is now
the challenge before us.

How have we been able to establish more equal-
ity? First, by the rule of law, secondly by the group-
ing of the weaker. And we are now coming to the
idea of solidarity to assure at least a minimum to
the underprivileged.

We now have to go over from our own national
societies to the international one with the same prin-
ciples and the same efforts.

Technology and Destruction

One point has been omitted up to now, and I
agree that it didn't belong in the title of this confer-
ence or as part of the agenda. It is the terrifying
contribution that technology can also make to the
power of destruction. Against that background, if
we accept the philosophy which equates civilization
to research for growing equality, an equality which
is no more a word but which we begin in fact to
have the means to achieve, we may very well save
ourselves, to reiterate Secretary Connor's final
words, by thinking in terms of mankind.

36

November 16, 1966

Afternoon Session — The Impact of International Measurement Conventions, Norms,

and Standards on World Trade

Mr. Stern: Ladies and gentlemen. This afternoon's
session is one that is critical to the principal role of
our National Bureau of Standards. It is equally criti-
cal to other bureaus of standards around the world;
many of them are represented here. Our chairman,
this afternoon, is a man who not only speaks the
language of standards, fluently and without accent,
but is also one who is continually contributing to the
vocabulary of the standards world.

It is a great pleasure to introduce the fifth direc-
tor of the National Bureau of Standards, also the
person who planned and executed this project, the
creation of these new laboratories which now stand
as the culmination of his efforts during 14 years as
Director of NBS: Dr. Allen V. Astin.

Dr. Astin: Thank you very much, Mr. Stern. Distin-
guished guests, our topic this afternoon is The Im-
pact of International Measurement Conventions,
Norms, and Standards upon World Trade. Our
speakers and other experts from several countries
will express their views on this subject.

Personally, I believe that standards underlie all
types of communication and exchange. The common
dictionary type of definition for standards is "that
which is accepted for current use through authority,
custom, or general consent." In this context lan-
guage, of course, is the oldest standard we have, and
the most fundamental standard for all communica-
tion.

More sophisticated types of communication also
require standards. Telegraph systems, radio systems,
television systems, and even the automatic data
processing systems that were talked about earlier to-
day, are all reaching the stage where adequate
standards are a critical factor in their more efficient
and effective utilization.

Standards in Science

Among scientists and engineers, communication
or exchange of quantitative information depends
upon the availability of generally accepted units to
which the measurements can be referred: the stand-
ard is merely a physical embodiment of one of the
units of physical science or engineering. Fortunately,
we have, through efforts beginning at the time of the
French Revolution and culminating in the Treaty of
the Meter in 1875, an effective international system
of units in which we can express the quantitative
language of science on a compatible, under-
standable, coherent basis.

Nearly all technologically sophisticated nations of
the world belong to this convention of the Meter.
The standards carried out under this Treaty support
the traditional types of commerce and trade, where
it is necessary to have units and standards to which
quantity can be referred.

Standards in Trade

The association of standards with trade is ex-
pressed, quite significantly, in the United States
Constitution, which links together in one phrase both
halves of the normal commercial or exchange proc-
ess. In our Constitution, the Congress is given au-
thority "to coin money, regulate the value thereof,
and fix the standard for weights and measures." It
is in that context of the utilization of standards in
trade that we will be concerned this afternoon.

Modern technology has brought into the market
place a wide variety of very sophisticated products
whose characteristics can only be specified through
extensive types of measurement systems. It is helpful
in the buying and selling and production of such
products to have standards for the performance or
the evaluation of such products. These types of
standards and their impact on international trade
will constitute the major part of our discussion.

37

ALLEN V. ASTIN was born in Salt Lake City, Utah, in 1904. He received his
bachelor's degree in physics from the University of Utah in 1925 and his Ph.D.
from New York University in 1928. From 1928 to 1930 he was a National Re-
search Council Fellow at Johns Hopkins University.

Dr. Astin joined the staff of the National Bureau of Standards in 1932. His
principal fields of work included precision electrical measurements, the develop-
ment of early radio telemetering techniques, and during World War 11 the develop-
ment of proximity fuzes. He was .named Chief of the Bureau's Ordnance Develop-
ment Division in 1948. The President appointed him as the fifth Director of the
National Bureau of Standards May 31 , 1952.

He serves as the U.S. member on the International Committee of Weights and
Measures and as Chairman of the Standing Committee of the Federal Council for
Science and Technology.

The World Trade Picture

Dr. Astin: Our first speaker this afternoon is Mr.
Francis K. McCune, who is Vice President of the
General Electric Company.

Mr. McCune: Dr. Astin and ladies and gentlemen.
Let me begin with a little philosophy. It is hard to
tell, of course, where standards started. It is fairly
clear that monkeys and even the higher primates
don't need standards. Even at a still higher level,
there was little need for standards when each family
produced its own food, its own clothing, its shelter
and was self sufficient unto itself. But beyond these
stages, standards are absolutely necessary, and this
has been recognized since prehistoric times. With
civilization comes exchange of goods and services,
barter or trade — and standards.

Let me point out here that I am not really talking
only about standards like those of time, dimension,
weight, money, and so forth. Fundamental as these
are, standards go far beyond these essentials. Stand-
ards as we know them today usually cover the fol-
lowing:

definitions, so that buyers and sellers speak a common
language;

mechanical or electrical specifications, so that compo-
nents may be freely interchanged;

safety requirements, so that society's interest may not
be compromised by transactions between individuals;
composition, properties, and methods of test standards
for materials, for processes and for devices;
minimum performance specifications, so that the user
may know in simple terms what the product will do.
Minimum because enlightened buyers are looking for
increased values through performance above standard.

If you will permit me one more observation, while
standards usually involve compromise, as does the
art of politics, they are in toto, I believe, the best
index, the most coherent summary of technical
knowledge in existence today.

These, then — definition, interchangeability, safety,
properties, and methods of test, and performance
levels, are basic to trade — and without trade, civili-
zation as we know it is impossible.

So let us look at some figures on trade itself. To-
tal world trade has been rising steadily since the end
of World War II, and has doubled during the last 10
years to an estimated total of $200 billion in 1966.
Most of the growth in trade has been among the
countries that are well developed industrially. The
total of world trade appears to be growing exponen-
tially.

There is substantial trade between developed and
undeveloped or under-developed countries, or
among under-developed countries. I believe, and I
believe all of you believe, that trade in these areas is
going to increase greatly. Hence, I think we are go-
ing to see an acceleration of this rather exponential
advance in world trade.

But I think that there are other things that we
must look at. I think that growth in technology will
also stimulate more trade. The amount of the
growth from this cause will depend to a great extent
on a number of countries and people that are able
to make use of the products which the new technol-
ogy provides; but I hope and believe that interna-
tional trade will grow from this factor much faster
than in the past.

There are many factors that affect international
trade, including tariffs and a variety of other bar-
riers, as has been mentioned this morning, to the
free exchange of goods among nations. The main
purpose of the several common market schemes
around the world is to eliminate these trade barriers
where it is feasible to do so.

Importance of International Standards

Lack of standards and differences in standards
have long been very troublesome barriers. Fortu-
nately, most countries now recognize that the devel-
opment and use of international standards will go a
long way towards the removal of such barriers. This
growing interest in international standards is appar-
ent in the expanding work of the ISO and the IEC.
There is no question but that international standards
will more and more become the commercial docu-
ments by which future international trade will be
conducted. We are already seeing evidence of this:

The OECD recommendations on development and
use of international standards in its 1964 progress
report.

The EEC and EFTA arrangements to harmonize
their standards.

CEE and its effort to have common electrical safety
standards throughout most of Europe.

39

FRANCIS K. McCUNE is Vice President of General Electric Company. In this
position, he is responsible for a program designed to assist operating management
in the making of major business decisions. Mr. McCune has been with the General
Electric Company since graduation, holding many and varied assignments in engi-
neering and general management. He has been responsible for GE's participation
in atomic energy programs, including operation of major government-owned instal-
lations, establishment of the Company's own nuclear facilities and development of
its business in that field. He was elected a company Vice President in 1954, and in
I960 became Vice President-Engineering and a member of the Company's Execu-
tive Office. He assumed his present position in J 965.

A native of Santa Barbara, California (1906), Mr. McCune received his Bache-
lor of Science Degree (cum lande) in 1928 from the College of Electrical and
Mechanical Engineering of the University of California at Berkeley.

Mr. McCune was Chairman of the National Society of Professional Engineers'
President's Council of Industry Engineering Executives, is a member of the Na-
tional Academy of Engineering and is the new President of the United States of
America Standards Institute.

Use of international standards by NATO and other
treaty organizations.

Use of international standards by the developing
countries.

The slope of those curves we looked at a moment
ago shows that all our people must engage in world
trade or sink to the position of small and insulated
markets.

Standards and Developing Areas of Technology

But beyond trade in being, let us look at some
rapidly expanding areas of engineering development
which will have, or are beginning to have, a major
effect on trade.

Man above all animals communicates, learns and
records. To communicate, he travels purposefully,
and in this century man has increased his speed of
travel at least tenfold on land and fortyfold on
water. Can you imagine automobiles in widespread
use without standards? Standards for materials, for
dimensions, for performance measurement, for inter-
changeability, for the tools used in their manufac-
ture, even for the plants in which they are built. The
Society of Automotive Engineers alone has issued
well over 2,000 standards.

Can you imagine airplanes without standards?

I am told that even a revolutionary new concept
in airplane design uses many thousands of stand-
ards. If it did not; the plane could hardly be pro-
duced at all. The Aerospace Industry Association in
this country has issued over 2,000 standards, and
yet both automobile and aircraft freely use ASTM's
over 3,000 standards, as well as electrical standards,
mechanical standards, government standards and
many others.

Let me remind you that a single standard covers a
multiplicity of things. For example, typical of the
Institute of Electrical and Electronic Engineers, 275
standards are — these are just at random:

A guide for operation and maintenance of turbine
generators, which covers 5 methods of temperature
measurement, 4 standards on loading, 24 require-
ments on machine operation, 25 inspection and
maintenance procedures on 7 different types of tur-
bine generators.

Transmission performance of telephone sets,
which contains 15 standards for test equipment, and
10 test procedures covering 30 different types of
tests.

Industrial control apparatus, which covers 17
groups of products with 4 different types of control
equipment, with 7 general standards on equipment,
with 5 types of interruption, with 1 1 types of capac-

itors, 5 classes of resistors, and 12 types of enclo-
sures, for a total of more than 200 standards for
individual devices.

In addition, there are individual standards on an-
other 1 12 devices, so I could go on but I won't.

Man's power to communicate brings us also to
the telephone, the radio and television. These are
media of mass communication and prime examples
of standardization; and again the materials used, the
components, the major processes, the means of
specifying and describing them all involve stand-
ards, as well as the standards truly pertinent to tele-
vision as such.

Man's ability to record has been primarily by
memory and by writing, and these involve language.
Language itself is not considered a standard, but is
it not really as close to a standard as one can come?
Certainly it involves definitions and rules for inter-
changeability, and now we have machine languages
which may in the end have even greater impact.
Suffice it to say that machines which talk to each
other and to objects in outer space know no pride of
nationality, and their language must be standardized.

So we see that man's peculiar abilities have in the
past century been enhanced manyfold by concepts,
systems and devices which involve standards and
which in many ways are dependent on standards.

But let us shift a moment, however, and look at
progress, past and maybe future, from a viewpoint
of science and engineering. The scientist examines
the processes and forces of nature with the hope
that he can understand them and hence can usefully
predict beyond the limited range of his ability to
observe and record. Usually he resorts to measure-
ment to gain his knowledge, and standards are the
very essence of measurement. Without them the
scientist would be at a loss to conduct his experi-
ments, and even more to communicate them to any-
one.

The engineer seeks to use knowledge of nature's
behavior to produce things useful to society. Let us
look here at the recent past and conjecture a little
concerning the future in this field. Each one of us as
an individual views progress through a different
screen, and we classify it in different ways. So let me
talk about the exciting technical achievements of the
past forty years as I personally have seen them.

Recent Technological Developments

As I left college, the exciting fields to me were
large machines, and in particular the problem of ac-
curate theoretical prediction of performance, which

41

was necessary for a sound design basis as the sizes
began to get big; telephone communication theory
and practice; tall buildings; high voltage, high fre-
quency and high-current phenomena; deep well ex-
ploration of our oil fields. At the same time, as
I can remember when I left college, farther out were
the development of radio, including high power tran-
mitters, sensitive receivers, high gain antennas, high-
frequency techniques; direct-current power transmis-
sion; diesel engines, and in particular the problem
of smooth, specifically timed injection which was
critical to efficient performance.

These continued to cast their spell, I think, until
late in the '30's, when radio and electronics began to
come into their own. Television was in its very em-
bryonic stage. There were no common agreements
on systems to be studied. Mechanical scanners were
still competing with crude cathode ray scanners and
image tubes. Control was moving from its primitive
state. Systems engineering was being recognized, and
with it the ability to engineer units too complex for
the single human mind to comprehend.

To many of us then came war and with it concen-
tration on such technical fields as aircraft, aircraft
propulsion, control using the speed and versatility of
electronics for many purposes. Also, the develop-
ment of feedback theory and its application to all
sorts of automatic controls, such as fast acting gen-
erators, voltage regulators, steel and paper mill
equipment, and gun-pointing; fully automatic track-
ing radar; great advances in communication and the
use of electronics for recognition and ranging; mi-
crowave radio technology — in essence, the marriage
of radio and optical theories; infrared technology
applied to the problem of seeing in the dark; in-
creased development of analog, and finally digital
computers, and so forth. And with these came nu-
clear energy devices.

Postwar we saw television for the general public,
which would have been totally impractical without
brilliant and painstaking standardization work; fan-
tastic increases in speed, size, and range of aircraft;
application of sophisticated controls to industry gen-
erally; rocket engines, not completely new but an
accepted engineering challenge of that time because
of wartime needs and new technology capabilities;
the further development of electronic and analog
computers; a whole realm of semiconductors and
circuitry, including transistors; the work of making
nuclear energy useful to peaceful society; and, only a
few short years ago, the beginning of our conquest
of space.

Of these, three great waves seem to me to stand
out — electronics, nuclear energy, and space. Today
we do not know what the next such wave will be but
many believe it is here already and it is the informa-
tion revolution.

The United States of America Standards
Institute

Let me pause to remark that for these reasons as
well as many others, the new United States of
America Standards Institute has come into being.
The American Standards Association had a long and
distinguished history in inspiring and certifying na-
tional standards. The new United States of America
Standards Institute will build on this foundation. It
retains the principles of voluntary standards, with
participation of all the affected segments of society
and arrival at a consensus, but is planned to go
beyond the American Standards Association in its
membership. It is reaching into truly affected sectors
of society in its ability to participate in international
work. That ends my commercial for USASI.

Future Developments in Technology

Returning to my theme of engineering, what do
we see for the next 10 or 20 years or even sooner?
Well, this business of predicting is a bad one. I had
a boss once who told me what to do on a podium.
He said that if you ever have an experiment to per-
form, first perform the experiment and then tell the
audience what they saw. Any other course is disas-
ter. Well, there is a lot of truth in this, and I can
remember very well that some years ago utilities in
our country asked my company and another to pre-
pare a movie which would be of interest to high
school children and might give them some incentive
to consider science and engineering as a career.
They asked for it to be not just held down to facts
but quite far looking, and we put some rather ab-
surd things into this after a lot of thought, far out; a
substantial part of this movie was man landing on
the moon in the year 2000. That's the fact.

Well, returning to my theme of engineering, what
do we see for the next 10 or 20 years or even
sooner? Supersonic transports, of course; communi-
cation by satellite as the rule worldwide, not the ex-
ception; exploration of the moon and space by in-
struments and by man; the use of space capability
for the betterment of mankind, including navigation,
air and sea traffic control, economics and dependa-
ble point-to-point communication; mass communica-

42

tion, especially for educational purposes, for use in
under-developed countries; longer range weather
prediction by means of space data gathering capabil-
ity and advanced electronic computer modeling of
global circulation; assessment and control of agricul-
ture, water resources, mineral resources, wildlife and
forests, through space observations over a wide
range of frequencies and using many kinds of sen-
sors; unlimited resources of economical power; some
say the electronic home, with the library, the paper,
the store, the business system, where the individual
needs in the way of information or communication
are at his fingertips in his home.

Some say that we are in a materials revolution, no
longer dependent largely on nature, to be able to
create exactly what we need for our structures, our
machines, and our systems.

Some say the wave of solid state devices is in
itself a revolution.

We look to understanding and beneficial control
of climate in the less favored parts of the world, the
arid and arctic regions; understanding of the
influence of the sun on the earth as it affects
weather, magnetic storms, communications, and so
forth; understanding of the earth's interior and crust,
primarily for the prediction in time to give people
protection from disasters, such as volcanoes, earth-
quakes, and tidal waves; cities without traffic jams

or bankrupt commuter railroads and subways; and
related to this are clean air, clean water, and no
unsightly dumps, no junk yards to beautify; hospi-
tals and schools in which the nurses, doctors and
teachers would be freed of drudgery and have time
for the human aspects of their jobs; unlimited food
for the hungry people of the world from a better
understanding and integration of marine biological
resources, biological fermentation of cellulose or
similar processes; understanding, occupation and use
of the world that lies beneath our oceans.

These are the things that fascinate our college stu-
dents today. Yet through all these run two common
themes. They are wanted worldwide and they are
wanted soon.

Let me submit that if the fruits of the foregoing
are to be available as well as wanted worldwide,
much needs to be accelerated in our worldwide
standards work, for each major achievement re-
quires standards, sometimes for the acceptable cost
made possible by a worldwide market and often
even to be useful at all.

To come soon, they must be accomplished by the
fewest people. Each must not be engineered from
the ground up. Each must build to the fullest extent
on the compendium of knowledge and accomplish-
ment embodied in worldwide standards.

My conclusion is that we have lots of work to do.

43

256-707 0-67-4

Dr. Astin: I think it might be better if we hear the
second speaker and then ask for questions on both
papers. Following that, we will take a brief recess
and then call for formal comments by four discus-
sants who are prepared to do this.

Our next speaker is Arthur Henry Ashford Wynn,
who is the head of the Standards Division in the
Ministry of Technology of the United Kingdom.

Mr. Wynn will talk to us on the subject, "Techno-
logical Barriers to World Trade."

Mr. Wynn: Dr. Astin, ladies and gentlemen: The
decision to hold a symposium on technology and
world trade to mark the dedication of the new labo-
ratories of NBS raises the expectations of all coun-
tries. This great enterprise, together with the estab-
lishment of the U.S.A. Standards Institute mark, we
believe, a change to a higher energy level in Amer-
ican standards activity with which I and the other
people from abroad are honored to be associated.

Since last year we have also been awaiting over-
seas with much interest the implementation of the
LaQue report, a document that has contributed to
all our thinking.

Standards as Help or Hindrance to
Internationa] Trade

All standards record a consensus. Standards codify
the wisdom of many. There are now about a thou-
sand standard recommendations of IEC and the
International Standards Organization, ISO, record-
ing a world consensus on a remarkable range of
detailed topics. These include standards for machines
and materials, methods of test and analysis, and
means of communication, including glossaries, codes
and units. No other area, as Mr. McCune has said,
of human affairs has produced such an extensive
and detailed record of consensus. There are, how-
ever, many thousands of national standards, often
enforced by legislation or national exclusive testing
or approval arrangements. These national standards
quite frequently offer formidable barriers to trade
between countries.

It is a thesis of this paper that it is urgent for
technologically advanced countries to exercise more
leadership in extending the world technological code
embodied in world standards, and that it is in the
interests, both of advanced and developing coun-
tries, that this should be done. This great occasion
offers us the hope that these new laboratories will
contribute to this purpose.

Information on standardization is manifestly more
important to smaller industrialized countries which
devote a higher proportion of GNP to exports. For
example, the United Kingdom exported 14 percent
of its GNP in 1 964, while the U.S.A. only exported
4 percent. In the same year, the. Netherlands ex-
ported 35 percent.

Of course, the flow of trade between the States of
the U.S.A. is not international trade and is subject
to few restrictions. In contrast, the flow of trade be-
tween the States of Europe is international and sub-
ject to many obstacles. Who can doubt that the im-
pediments that there have been in Europe to the
free movement of people and goods provide at least
a small part of the explanation for the lower stand-
ard of living in Europe compared with the U.S.A.
Differing standards, both voluntary and compulsory,
are obstacles to trade that are often overlooked in
the preoccupation with tariff barriers.

International standardization is necessary for the
removal of barriers which often impose more restric-
tions on trade than do tariffs, but the profit to be
harvested from international standardization is al-
most certainly greater in Europe than in the U.S.A.
Europe has the larger problem but the less saturated
markets. However, all countries, including the
U.S.A., are becoming more dependent upon their
foreign trade.

Harmonization of International Trade

Where is the driving force for increasing the pace
of international standardization activity? One great
force is that of the Common Market countries, anx-
ious to harmonize their trade. These countries, with
a total population similar to that of the U.S.A., have
what may be described as an economic gravitational
field. The United Kingdom and other members of
the European Free Trade Area are within that field,
in orbits of apparently diminishing diameter.

The developing countries, anxious to benefit from
the best advice and to reduce the difficulties of mul-
tiple standards from which they already suffer, are
another force. An increasing number of developing
countries, particularly the new African states, are

44

ARTHUR HENRY ASHFORD WYNN is Head of the Standards Division in the

Ministry of Technology of the United Kingdom.

Born in 1910, Mr. Wynn received his education at Oundle School and Trinity
College, Cambridge, where he was an Entrance Scholar in Natural Science and
Mathematics. After granting of his M.A . Degree, he qualified as Barrister-at-Law.

He worked for A. C. Cossar Ltd. in the electronics field from 1939 to 1948, at
which time he assumed the position of Director of Safety in the Mines Re-
search Establishment of the Ministry of Fuel and Power. From 1955 to 1965 Mr.
Wynn was Scientific Member of the National Coal Board, serving at the same time
as a member of the Advisory Council on Research and Development of the Min-
istry of Power. He was also a member of the Safety in Mines Research Advisory
Board during the period 1950 to 1965.

within the gravitational field of the Common Mar-
ket. These developing countries will generally adopt
international standards and not the standards of any
particular developed country.

The greater concern of Europe with international
standardization is to be seen in the location of the
secretariats of the ISO and IEC technical commit-
tees. Of the 242 ISO technical committee and sub-
committee secretariats, the six countries (Belgium,
France, Germany, Holland, Italy, Luxemburg) of
the European Economic Community (EEC) to-
gether hold 119, the United Kingdom 38 and the
U.S.A. 60. Of the 133 IEC technical committee and
subcommittee secretariates, the European Economic
Community (EEC) holds 69, the United Kingdom
26 and the U.S.A. 13. The United Kingdom, repre-
sented by the British Standards Institution, has been
among the first two or three nations in its con-
tribution to international standardization at all
times. There are also international "Standards" or-
ganizations, for example, the International Organi-
zation for Legal Metrology (O.I.M.L.) to which the
United States has not hitherto belonged.

I cannot claim to understand all the obviously se-
vere restrictions on the full participation of the
U.S.A. in world standardization in the past.

The elimination of the barriers between the six
Common Market countries and the removal of ob-
stacles to trade are express purposes of the Treaty
of Rome, which established the European Economic
Community or Common Market. This is part of the
process now generally known as harmonization. The
acceleration of standardization has been interpreted
as an essential part of this policy of harmonization.
The Treaty of Rome is removing all barriers to
trade within the Common Market due to differing
national standards, disparate legislation or purely
national testing or certification arrangements. The
initiative in international standardization comes,
however, mainly from the individual countries rather
than from the organization of the Common Market.

We are reacting to this in the United Kingdom.
The confederation of British industry, which is a fed-
eration of all trade associations, speaks for British
industry as a whole and has urged the British Gov-
ernment to "support, and be seen to support every
attempt to secure international alignment of stand-
ards in the appropriate international forum. It
should, moreover, both in its own legislation and in
its procurement policies, give the strongest support
to acceptance of internationally agreed standards as
British standards without deviation."

The seven countries of the European Free Trade
Area have been much concerned that the deliber-
ations within the Common Market should not lead
to new obstacles to trade between the two blocs, and
the seven governments who belong to the Council of
Ministers agreed at Bergen in May 1966 that: "The
Ministers should give strong encouragement to in-
dustries, departments, and to standards bodies to
pursue the objective of early agreement on standards
in the European and, where appropriate, in the inter-
national standards organizations.

The national standards bodies should be pressed
to make the strongest efforts to secure full acceptance
of these agreements in national standards without
deviation, and public purchasing departments should
be urged to take full account of such standards."

The standardization activity of the Common Mar-
ket countries is not only of concern to Europe be-
cause the results influence the deliberations of ISO
and IEC very quickly and are indeed often intended
to do so. European countries are strongly represent-
ed on every committee and therefore are in a good
position to influence ISO deliberations.

Technical Areas Affected by International
Standardization

The pace of international standardization is in-
creasing. In the last 10 years ISO produced about
500 recommendations. It is hoped to produce over
100 in 1966 alone. ISO is being expanded, and it is
planned to produce 200 in 1967 and more than 300
recommendations a year from 1969 onward.

On what subjects is this international standard-
ization activity particularly concentrated? The great-
est activity in most countries is concentrated on
compulsory national standards. It is widely believed
that these national standards enforced by law are
the greatest of all obstacles to international trade.
These standards have received the special attention
of working parties of the Commission of the Com-
mon Market under the general heading of "Obsta-
cles to trade arising from provisions of a technical
order." These working parties have, for example,
produced 12 Council Directives concerned with mo-
tor vehicles and 5 with agricultural tractors.

Motor Vehicles

Conformity with these standards is likely to be-
come essential to any manufacturer wishing to sell a
vehicle or tractor within the Common Market.
Alignment of EFTA with Common Market stand-
ards and extension to African associated States and

46

Greece and Turkey may increase the purview of
these directives eventually beyond the six members
of the Common Market.

These motor vehicle and tractor standards have
built into them operational experience, engineering
knowledge and research results. They also record a
consensus about the price that is worth paying for
increased safety. There seems to be no good reason
why motor vehicle standards vary much from one
country to another. Certainly the greater the pool of
experience, knowledge, and research results under-
pinning the standards, the better they are likely to
be.

There is everything to be said, therefore, for dis-
cussing such standards in as wide a forum as possible
and for a constructive dialogue between Europe
and America, with a pooling of wisdom and experi-
ence. Indeed, the failure of this dialogue to proceed
fast enough in the past and the unilateral action on
both sides of the Atlantic already taken or about to
be taken, seem certain to result in substantial
further losses in trade to most manufacturers.

Twelve years ago it was only necessary to
produce two versions of an automobile for sale to
Europe. Today, in spite of excellent work of the
Economic Commission for Europe, it is necessary to
produce 9 or 10 versions. The barriers to trade are
growing. Regulations governing motor vehicle design
are essential but it is not clear that anyone benefits
from compelling manufacturers to produce a dozen
different designs for different markets. Nor is it clear
that the cost of international negotiations could ever
be at all comparable to the losses to countries, in-
cluding the United Kingdom and the U.S.A., who
manufacture motor vehicles, caused by disparate
regulations, and motor vehicles are, of course, only
one area where trade is impeded by disparate regu-
lations.

Foodstuffs, Food Preservatives and Proprietary
Medicines

The Council of the Common Market has issued
directives concerned with coloring matter in food-
stuffs, food preservatives, and proprietary medicines.
Directives concerning preservatives, for example,
came into force in November 1965. The directive
explains that it "is necessary with a view to the free
circulation of commodities intended for human
food," but the primary concern, of course, is with
free circulation within the Common Market. More
than a quarter of the world's trade is in this area of
food and drugs. Every country has its food and

drugs legislation, and it can be sound only if based
upon research that is generally costly, indeed, so
costly that it can only be afforded by the most ad-
vanced nations. There is everything to be gained by
aiming at a world consensus about each individual
coloring matter, insecticide, herbicide, preservative
or drug.

The advanced nations generally need world mar-
kets to help pay for the research and if expensive
duplication of research beyond the means of most
nations is to be avoided, then the smaller and poorer
nations must rely on the research undertaken by the
few.

The international standards for food and drugs,
including insecticides and herbicides, are of primary
economic importance and must be a major object of
future research.

Safety and Health

Insofar as the purpose of technological advance is
improvement in the human condition, then the im-
provement of safety, health, and amenity are an es-
sential part of that purpose. In the standardization
activities of governments, and these European gov-
ernments in particular, there is nevertheless a double
motivation. There is the urge for harmonization in
order to satisfy the need of modern industry for a
large market, a need that flows from the economies
of scale and from the falling real cost of transport,
due in part to the increased value of many manufac-
tured goods per unit weight. Harmonization is a
profit-generating activity, more, particularly for the
large, low cost producer. This is the first motive.

Harmonization has, however, to be consistent
with the public will for promotion of safety, health,
and amenity, which has been government's tradition-
al concern with standards. This public will provides
the second motive.

The formidable barriers to trade have resulted
from compulsory national standards and have not
generally been erected primarily to protect indige-
nous producers but have resulted from the essential-
ly national or even local character of legislation con-
cerned with health, safety, and amenity. This
legislation will remain national and local. The bar-
riers to trade can still be removed if legislation is
increasingly based upon international standards. If
there is adequate international cooperation to ensure
that these standards reflect the best possible world
opinion, then the quality of the local legislation may
often advance more rapidly than hitherto.

47

Many barriers to trade cannot be removed by in-
ternational standardization alone. It is also essential
to have international testing and inspection conven-
tions. This is necessary because the screening out of
equipment that is unsafe or dangerous to health
should not be left to market forces but should be
made the job of an expert organization backed by
national legislation.

The difficulties of exporting any kind of pressure
vessel to many countries of the world, including the
U.S.A., are well known but are still daunting. This is
a very old problem. The United Kingdom now has
reciprocal testing and inspection arrangements for
pressure vessels with a number of European and
Commonwealth countries, without, however, having
yet harmonized the standards. The United Kingdom
would welcome such reciprocal arrangements with
the U.S.A.

Electrical Equipment

Some of the worst hidden barriers to trade con-
cern electrical equipment. Almost all electrical
equipment exported to some countries has to con-
form in such matters as the adequacy of insulation
or rise of temperature and has to be approved as
conforming.

In the Scandinavian countries a safety mark is
compulsory by law. In the official showrooms of
power authority suppliers, in France, only products
bearing the NF mark are allowed. There are many
main plugs and miniature plugs. A dozen or so
different models of radio receiver, vacuum cleaner,
or electric iron are necessary for export to European
countries alone.

There are Common Market directives in draft
concerning low tension electrical equipment, house-
hold electrical equipment and portable electric tools.

The Common Market Commission can rely on
the ground work that has been done by the Interna-
tional Commission on Rules for Approval of Elec-
trical Equipment, usually known as CEE. All the
18 member countries are European, although the
United States has sent observers to meetings for the
last 17 years. The CEE is a powerful code-making
organization, concerned not only with safety stand-
ards for electrical equipment but with compatibility,
and it is perhaps likely in the future to be increas-
ingly concerned with standards of quality and relia-
bility. We do not understand why the U.S.A. has felt
for 17 years unable to give full support to this bar-
rier-removing organization.

Conformity with performance requirements can-

not be established by visual inspection, and a stand-
ard testing procedure is generally needed. The CEE
will issue a certificate of compliance with CEE
specifications for any equipment if advised to do so
by the testing station of the country of manufacture
and of one other country. The certificate is then ac-
cepted in all 18 countries. This is an outstanding
international agreement for reducing trade barriers.

A few other conventions exist, but very few. The
British Standards Institution, for example, is recog-
nized by arrangement with the Canadian Standards
Association as a testing and inspection body for all
British electrical equipment exported to Canada.
There is no such reciprocal arrangement between
the British Standards Institution and any organiza-
tion in the U.S.A. What organizations in the U.S.A.
can be parties to testing conventions with, say, CEE
or BSI? Is this one of the future roles of the United
States of America Standards Institute? It will be in-
teresting to know whether the U.S.A. already has
any reciprocal testing or certification conventions
with other countries or whether there are any new
conventions in mind.

Quality Assurance and Performance Criteria

The need for testing conventions is not confined
to electrical equipment or problems of health and
safety. There is a great interest in Europe for
schemes in quality assurance. The distinguished re-
port of the National Commission on Technology,
Automation, and Economic Progress, entitled "Tech-
nology and the American Economy," placed great
emphasis on the use of a performance criteria as a
means of promoting technological innovation and
advance.

The same emphasis on performance specification
is evident in Europe and in the United Kingdom and
is likely to be reflected in international standards.
The international implications of this great emphasis
on performance criteria still need, however, to be
thought through.

The economic role of performance specifications
in our competitive market economies also merits
discussion. Performance specifications can be used
to reinforce market forces and strengthen the market
economy, and can also be used restrictively.

Test specifications may be used only to disclose
performance facts to buyers, and so to increase their
power of discrimination. Specifications used in this
way strengthen and accelerate the action of market
forces in eliminating the inferior and promoting
technological advance. This is a role of performance

48

specifications which we regard as wholly beneficial
to a free economy.

However, test reports that include opinion, even
expert opinion, can bias consumers' choice, and are
in a sense restrictive. Performance specifications can
also provide the basis of legislation. It is a tradition
in the United Kingdom only to use such legislation
to promote safety, health, or public amenity, for
example, under the Factories or Mines and Quarries
Acts.

Some new schemes in the United Kingdom direct-
ly concerned with performance specifications and
testing already have international implications. For
example, there is in the United Kingdom an associa-
tion of big purchasers of instruments, mostly of the
type used in the processing industries, that "evalu-
ates" instruments. This is an essentially permissive
scheme for reinforcing market forces. The instru-
ments are tested in the laboratories of the Scientific
Instrument Research Association for conformity
to performance specifications agreed between user
and manufacturer. Factual reports are produced and
circulated to members. The costs of quite expensive
tests of new instruments are spread in this way over
the members. There is now a similar association in
the Netherlands and the recent agreement between
the United Kingdom and the Netherlands Associa-
tions to accept each other's "evaluation" reports.
This is an interesting example of a quality assurance
scheme that has been established on industrial rather
than government initiative and on the initiative of
industrial consumers rather than manufacturers.

Not only British but American and continental in-
struments are tested for conformity to specification,
including accuracy and reliability. The scheme illus-
trates a growing concern with quality and reliability,
particularly of on-line process equipment, and also
the growing cost and difficulty of choosing the right
equipment for the job. Both the industrial buyer and
domestic consumer are increasingly concerned with
this problem of choice over a range of equipment
much wider than industrial instruments.

There is another quite separate scheme in the
United Kingdom for the evaluation of new building
components and materials. This is quite similar to
the French scheme for the testing and approval of
building components. Both schemes are concerned
essentially with promoting progress in building and
construction by using performance criteria for
screening new developments.

The French scheme was motivated by insurance
requirements for new buildings; the British scheme

was initiated by Government for the purpose of
accelerating acceptance of new building techniques
and reducing variety in favor of the better building
techniques. Reciprocal approval arrangements are in
mind. There is an element of compulsion in this
scheme, as each certificate is deemed to indicate
compliance with building regulations.

There is a separate, well-established scheme for
the performance testing and evaluation of agricul-
tural machinery in the United Kingdom by the
National Institute of Agricultural Engineering.

These new schemes are part of a spectrum of ac-
tivity that provide consumers, including industrial
consumers, with quality assurance. Such schemes,
unless well conceived, have their dangers and can
introduce further barriers to trade.

The national standards organizations are much
concerned with quality assurance and have associat-
ed national marks, such as the BSI Kitemark in the
United Kingdom, the NF mark in France and the
JIS mark in Japan.

Generalizations about the economic role of these
marks are liable to be wrong, as they have many
purposes. When applied to some products such as
crash helmets or life belts they are often rightly
compulsory and restrictive, but when applied, for
example, to metal finishes or the composition of al-
loys they are permissive and informative and a valu-
able help to the market. These well-known marks all
indicate conformity with some national standard.
The use of the mark is generally based upon
approval of a manufacturer's - quality-control pro-
cedures or on procedures agreed on by a whole
association of manufacturers. For some products,
samples have to be submitted to independent test.

Conventions between nations for the reciprocal
acceptance of the marks of their standards bodies
are conceivable and have indeed been discussed but
in general no conventions exist. There are, however,
models to be followed, including the testing proce-
dures already mentioned of CEE, and the Anglo-
Dutch arrangements for the evaluation of instru-
ments.

An extension of these schemes concerned with
quality assurance is certain. There seems to be no
reason why evaluation techniques of the kind al-
ready used for quite complicated industrial control
equipment should not be extended to cover com-
puters and ancillary equipment and communication
equipment, including satellite equipment and even
civil aircraft.

49

Such schemes could be extended internationally.
The essential requirement is always an objective
specification defining the tests to be performed, pref-
erably agreed between manufacturer and customer.
There is much to be said for the manufacturer
having the right to veto the publication of a report if
he wishes. This is in fact what we are generally do-
ing. A satisfactory performance specification can
hardly ever be written except at the end of an experi-
mental program.

Performance specifications for oil-hydraulic equip-
ment, or bearings and lubricants, or electronic com-
ponents, or almost all components or finished equip-
ment of industrial importance can be written only at
the end of an experimental program that may be ex-
pensive.

The production of sound performance standards
depends indeed upon an intimate knowledge of what
is possible as well as what is needed. Such knowl-
edge is generally to be found only within the fron-
tiers of the technologically advanced nations, and
notably within the U.S.A.

This is, therefore, a particular point where the
world needs the leadership of advanced countries.

Barriers to Communication

All the barriers to trade that have so far been
discussed in this paper, including performance
standards, are concerned with end products of tech-
nology and their suitability for use. Barriers to com-
munication are probably of comparable economic
importance, and the long history of standards is pri-
marily concerned with problems of communication.
No commercial transaction at a distance is possible
without standardization of word meanings and units
of quantity. These problems include the provision of
basic and derived standards of measurement and
their transfer, the language of units and indeed the
language of science and technology, the new lan-
guages of data processing and transmission, institu-
tional structures and procedures used by such or-
ganizations as ISO and IEC, and much else besides.

The technology of the world advances by the diffu-
sion of technology from discrete innovating centers.
The rate of economic advance of all nations depends
very much upon this rate of diffusion of new tech-
nology. The smaller and developing nations are
heavily dependent upon diffusion of this knowledge
from outside their frontiers. International standard-
ization makes a double contribution to this diffusion
of knowledge. Standards are authoritative statements

about technology, but standards are also concerned
with processes of communication.

The U.S.A. has played a very leading part and
has a special responsibility to the ISO for nuclear
energy standards. Various organizations may be said
to be planning the diffusion of new knowledge about
nuclear engineering to the future owners of nuclear
power stations.

Traceability

The communication of standards of measurement
can also be planned. Traceability is a word that was
born in the U.S.A. in the 1950's. Standards of meas-
urement are, of course, of no use unless they can be
communicated. Many measurements inevitably lose
accuracy in the course of communication. The art of
communicating measurement standards is, therefore,
itself a proper object of research, and in due course
of the standards code defining the method of trans-
ferring, say, a measurement of radio frequency
power from a central national institution to the
manufacturer's standards laboratory.

The greater use of atomic definitions of units
could reduce the problem of communication.

In the United Kingdom we have followed with
much interest the work of the National Conference of
Standards Laboratories in the U.S.A. We are creating
a British Calibration Service in the United Kingdom
with a somewhat similar purpose but also with the
ambition of giving meaning to the word "traceabil-
ity." I hope that we may before too long have a
series of standards as a foundation of traceable
chains for many classes of measurement.

Technology is demanding ever higher levels of ac-
curacy for a wide range of measurements. This ac-
curacy is required on the job in many parts of the
world. The communication of a measurement to the
point of use, or the diffusion outwards from central
laboratories of measurement capability, is a large
part of the problem and purpose of the British Cali-
bration Service. The end of this development must
be a much extended matrix of laboratories in the
world as a whole, with measurements traceable to a
few central laboratories and ultimately to the labora-
tories of the BIPM.

The concept of traceability as applied to measure-
ment derives not so much from the location of ulti-
mate standards as from a greater capability in a
given location as a consequence, for example, of su-
perior equipment.

The application of the concept of traceability can
therefore be extended notably to materials of high

50

purity or special composition. Traceable measure-
ments are needed throughout industry, defense and
commerce. The Common Market has given priority
to the needs of commerce and there are now a
number of draft Council Directives to the Common
Market concerning weights and measures.

International System of Units

During recent years the world has gone far to-
wards the adoption of an international system of
units, or SI units. Perhaps the most important thing
about units is to use them to help international trade
and not to allow them to obstruct the adoption of
international engineering and commodity standards.
In the United Kingdom we know that we shall have
to continue to live with both the SI and the English
or Imperial system for a period. We are, however,
adopting the metric units at points where it is be-
lieved that they will help and not injure the econ-
omy. This requires much study and consultation and
the results are often surprising.

The concept of a module, for example, is particu-
larly important in the building and construction in-
dustry. In the U.K. it has been decided to adopt a
10-centimeter module. Thirty centimeters will also
be a preferred dimension. No compulsory legislation
converting the whole economy to the metric system
is at present in mind, but rather the use of the met-
ric system and SI units for increasing numbers of
limited purposes, like its present use in the motion
picture industry for film standards. Electric motors
are a particular example of an early change.

Units are just one contribution of standards to the
art of communication. Of even greater importance
in the future will be the standards for data process-
ing and transmission. The ASA has made an out-
standing contribution introducing American stand-
ard FORTRAN. The U.S.A. holds the secretariats
for IEC Technical Committee TC-53, Computers
and Information Processing, and TC-53 (b), Digital
Data Transmission, and is therefore in a unique po-
sition to influence and accelerate production of
world standards for data processing and transmis-
sion. Work is needed urgently to control the prolif-
eration of new words and acronyms.

We may perhaps anticipate a great need for per-
formance criteria for both computer equipment or
hardware and for software, to give confidence and
facilitate trade across national boundaries. Design
standards are necessary for electrical connections,
data format, and speed of transmission in terms of
error rate and so on.

The most serious problems, however, may con-
cern the man-machine relationship. The develop-
ment of software sophistication may eventually re-
quire more direct man-machine communication,
while details of the machine code and operating sys-
tem will be looked after by the compiler and execu-
tive and will be of no interest to the user.

These developments may bring to the fore the
great problems of national language differences, par-
ticularly if the maximum international use is to be
made of facilities.

Information storage and retrieval will grow in im-
portance with bigger storage banks in different coun-
tries able to interchange information. Standard
methods of indexing and recording will be essential.
There is perhaps no bigger area of new problems.
There should be much scope for close collaboration
between the Ministry of Technology and Depart-
ment of Commerce's new Center of Computer Sci-
ence and Technology in data processing and trans-
mission.

ISO and IEC

The central administrations of ISO and IEC are
not commensurate with their great responsibility and
they are to be strengthened, for this reason. The
separation of ISO and IEC is perhaps also a weak-
ness to be overcome in due course. The investment
in these organizations by advanced nations will still,
however, amount to no more than a small fraction
of one penny, or one cent, per annum per head of
our populations. Is the possible contribution of these
organizations to reducing trade barriers really so
marginal? Do all our other investments abroad in
developed and developing countries really produce
a higher return?

The main staff work can, however, never be cen-
tralized. The main contribution of individual nations
may probably come through the secretariats, like
TC-53. Much can be done by technical committee
secretariats, by informal discussion and corre-
spondence, to establish world consensus in advance
of formal meetings. It is increasingly necessary for
each secretariat to be supported by a specialized in-
formation center, and these information services
should be available to the central offices of ISO and
IEC. Many programs will also require laboratory
support. Indeed, the secretariats that we hold should
influence the staffing of our organizations in re-
search and development projects. All of us who
hold technical committee secretariats have an exact-

51

ing task to win the confidence of other countries,
both in our technical ability and our intentions.

International Standardization Activities in
Various Countries

The Soviet Union and other countries of Eastern
Europe do not hold many technical committee
secretariats, but they do make a great contribution
to international standards activity and are to be
numbered among the countries whose confidence
has to be won.

The United Kingdom has frequently been in the
lead in international standards activity. We believe it
has been a good investment for us. In the United
Kingdom, insularity is in decline.

It is still a very difficult matter to decide upon the
right balance between activities aimed at achieving

national and international consensus. We appreciate
that it is more difficult to decide upon the right bal-
ance for a country as large as the U.S.A. How-
ever, the world will lose much unless the variety of
organizations concerned with removing technological
barriers to world trade receive the full support of
the U.S.A.

There is a great spectrum of activity, over-
simplified in this paper, needing international
collaboration and your help. The United States of
America Standards Institute and the National Bu-
reau of Standards, supported by the finest standards
laboratories in the world, will, we know, bring great
benefit to the U.S.A.. and will, we hope, also make a
contribution to world standards activity commensu-
rate with the great contribution that the U.S.A.
makes to world technology.

3S8SSSSSSSSSS®;

QUESTIONS FROM THE FLOOR

Dr. Astin: Thank you very much, Mr. Wynn. Both
Mr. McCune's and Mr. Wynn's papers are now open
for discussion.

Mr. Podolsky: My name is Leon Podolsky from the
Sprague Electric Company in Massachusetts. I ad-
dress myself to Mr. Wynn. He has asked a number
of provocative questions. I am going to limit myself
to just one — his remarks with regard to CEE mem-
bership.

He commented that in 17 years the United States
has been only an observer to CEE. It is our under-
standing that the charter and national legal basis
for CEE has in all this time actually precluded mem-
bership by the United States in the CEE and nothing
more than observer status is available to us. Would
you care to comment on that, sir?
Mr. Wynn: I went into that myself and I got the
answer that the USA was not precluded from joining;
I would comment further that all constitutions can be
changed.

Mr. Podolsky: For 17 years we were welcomed as
observers but not as members with a vote.
Mr. Wynn: We will give the USA every support in
trying to change the constitution accordingly.

Dr. Astin: Are there further questions or comments?

Question: How much progress has been made in
standardization and communication of standards
between Eastern Europe and Western Europe?

Mr. Wynn: As far as we know, the countries of
Eastern Europe are very quick to adopt ISO and IEC
standards, but I believe there are people here from
Eastern Europe who can reply better than I can. I
think of all the countries in the world they respond
extremely quickly in enforcing and adopting inter-
national standards, once agreement has been reached,
and they fully cooperate in the standards committees
of ISO, IEC, and so on.

Dr. Astin: Would you care, Mr. Sharpston, to com-
ment further on that point?

Mr. Sharpston: Yes, Mr. Chairman, I would con-
firm the substance of that last remark. I have had
this directly from the ISO staff and the members,
that in their work they do very rapidly adopt the
ISO recommendations where these are favorable,
this being particularly true in their own regional
grouping.

ssssssssssssss;

52

Dr. Astin: We will now have our topic discussed by
four experts on the subject of standardization. The
first of these is Mr. Fayvel Hadass, who is the Direc-
tor of the Standards Institution of Israel.

Mr. Hadass: Dr. Astin, Ladies and Gentlemen: I am
not supposed to take more than five minutes of your
time. In five minutes or 300 seconds in the non-dec-
imal system that are at my disposal, I wish to bring
some fragmentary comments related to the aspect of
developing countries.

Looking back at the past 50 years, two events are
most conspicuous; the immense technological ad-
vancement so well described by Mr. McCune, and
the awakening of a very considerable part of hu-
manity to their economic potential. No doubt, both
phenomena are interrelated.

Looking ahead, we are facing two imminent
world trade factors: One — Through further tech-
nological advancement, the plenty of today may,
under peaceful world conditions, turn into a disturb-
ing surplus. This is not unlike the surplus brought
about by industrial farming. Second — The awak-
ened part of the globe can and is going to be turned
into the potential recipient for this surplus. A first
family car in Africa will be a better choice for the
surplus automobile than the third family car in the
producing country.

It is therefore the concern of the highly advanced
countries to promote the buying power of these po-
tential markets. In order to become paying pur-
chasers they must produce added values. Here, tech-
nology can assist them in becoming a productive
and constructive world trade factor. What I have in
mind is applied technology, since sophisticated
scientific technology is going to remain for a long
time the domain of the most advanced nations. In
young countries, sophisticated technology often re-
sults in prestige ivory towers. A baby should be fed
milk, not steaks!

An important tool of technological advancement is
no doubt standardization. It is of utmost importance
particularly to developing countries as suppliers as
well as purchasers in the world market.

— -It helps them to establish, right from the begin-
ning, an adequate quality of production.

— It helps them to become discriminating buyers,
thus intelligent spenders.

— It offers them a kind of clearing house in the
complex of world trade.

— It also offers to the beginners the benefits of
knowledge and experience accumulated in the exist-
ing standards.

Developing countries are particularly interested in
international standards. They can and will develop
their national standards, mostly those related to
their specific natural, social and technical conditions.
But in foreign trade, for all practical purposes, they
are dependent mostly on standards of the buying
and even selling advanced countries. The bitter taste
of "colonial quality" is still fresh in the minds of
Africa, Asia and Latin America. Naturally enough,
they find international standards, based on world
consensus, more just and reliable. The more so in
the role of suppliers of raw materials and
semi-finished products.

It is in the interests, also, of the industrialized
nations to help the developing part of the world be-
come standard-minded and assist them in setting up
standardization and testing facilities.

From what I have been able to learn in the pilot-
plant-sized economy of Israel, differing standards,
the dualism of systems and the inadequate coverage
of international standards are — always a nuisance,
usually a waste of time, energy and money, often a
serious trade barrier. I will illustrate with two exam-
ples — 62% of the Israeli plywood production is be-
ing exported. Our national standard provides for 47
size varieties. Because of the lack of an internation-
ally agreed-upon standard, we have to deliver many
hundreds of sizes. — At the conference table of an
international committee, the Indian iron ore export
just increased its return by a^ full percent — , by
millions of dollars.

May I address a few words to my hosts? From
observations collected around the globe, I sincerely
conclude that the most advanced and standard-
minded American technology is still detached, to a
regrettable extent, from international standardization
activities. I am convinced that you could give and
take much more in international trade through
closer cooperation in this area. If world trade is to
be really free, smooth and decent, it is imperative to
develop a global and uniform trade yardstick — to
my mind, a meter-stick.

Those who are qualified for leadership have to
place the horse before the cart — and act early and
decisively!

When Lindbergh crossed the Atlantic, the rabbi
admired his skill and courage, but failed to under-
stand his hurry. Today, all of us are in a hurry —
even the rabbi travels by plane.

53

FAYVEL HADASS is Director of the Standards Institution of Israel. His industri-
al experience began in Danzig in the automotive industry. Upon his emigration to
Israel in 1932 he spent seven years on the mechanization of farming. During
World War II he spent four years on the development of the local industry for the
War effort and served as Member of the A Hied War Supply Board.

For the subsequent four years Mr. Hadass was active in international trade
with an American firm. With the establishment of the State of Israel he became
Controller of Light Industry and a Member of the Board of the Investment Centre,
as well as adviser on industry to the Ministers. He founded, and for four years
managed, the Institute for Vocational Safety.

Mr. Hadass has been associated with Standards work for seven years and he is a
Member of the Board of the Institute for Productivity.

Dr. Astin: Our next discussant is Mr. Francis L.
LaQue, who is Special Assistant to the President of
the International Nickel Company of Canada, Limit-
ed, and a Vice President of the International Nickel
Company, Incorporated, assigned to executive sup-
port of major corporate activities.

A short time ago he headed a distinguished panel
under the Commerce Department's Technical Advi-
sory Board to study our national needs with respect
to standards. His report is well known and has been
widely read and discussed and I think was a major
factor in the recent organization of the United States
of America Standards Institute. It is my pleasure to
present to you Dr. LaQue.

Dr. LaQue: Thank you, Dr. Astin. Distinguished
guests from abroad, ladies and gentlemen: I will take
the risk of telling a story that might be considered
to be funny to some people, and it has a moral. The
story is this.

There were a lady and her husband walking down
the street. The lady noticed a weighing scale in a
doorway. She went over, got weighed and came
back with smiles all over her face.

Her husband asked her, "My dear, how much
overweight are you now?"

She said, "I am not overweight at all. There is a
chart in there on that scale, and according to that
chart I am 6 inches too short."

The moral is obvious, of course, that when rela-
tionships are indicated between one measurement
and another we cannot safely assume the interpreta-
tion of this relationship is going to be the same by
everyone who endeavors to make it, and I would
think that the danger in this direction is likely to
increase with the international use of any such sys-
tems of relationships.

I assume that the ground rules will permit me to
deal, in my occupation as discussant, with matters
that were presented this morning as well as this
afternoon. I was particularly interested in trying to
prepare a discussion in advance of what I thought
Dr. McLuhan might say. That was an interesting
activity, so in preparing my comments an immediate

problem was presented in trying somehow to relate
anything as "hot" as precise standards documents to
the "cool" world which Dr. McLuhan visualizes as
being imminent and perhaps desirable. The words
"hot" and "cool" are used in this context in the
sense that the speaker has tried to understand Dr.
McLuhan.

Precision and Uniformity in Standards

In the field of international trade, in which stand-
ards are an essential component of the language of
communication, it is likely that everyone will agree
that there must be maximum precision in describing
by reference to an appropriate standard what the
buyer expects to receive and what the seller agrees
to furnish. There must also be precision in the de-
scription of how compliance with stipulated require-
ments is to be determined, so that the buyer can
confirm that he got what he expected and so that the
seller can be sure that what he furnished is likely to
meet the tests that will be applied by the buyer.

The ability to describe what is wanted and what is
offered very precisely become more and more im-
portant as the revolution in means of communica-
tion progresses. It is already possible to transmit
facsimiles of printed documents overseas in a matter
of minutes. When such means of communication
take the place of discussions at first hand, the
need for precision in description of what is being
dealt with becomes greater and greater. Along with
this need for precision is an almost equal need for
uniformity of standards on an international scale.
Thus, advances in communication techniques in-
crease the urgency of the development of interna-
tional standards as a vital factor in world trade.

The standards I have been discussing apply, of
course, to things that are prescribed in terms that
describe exactly what is to be furnished, keeping in
mind the purpose for which it is to be used. These
precisely descriptive standards or specifications must
of necessity fall into what Dr. McLuhan would con-
sider to be a "hot" category.

Performance Criteria

On the other hand, we can see a trend toward
another type of standard or specification which pre-
scribes what is wanted in terms of the performance
needed or expected, without stipulating how this
performance is to be achieved. This begins to ap-
proach Dr. McLuhan's realm of the "cool", since it
implies a degree of freedom — if not exactly free-

55

FRANCIS L. LaQUE is Special Assistant to the President of The International
Nickel Company of Canada, Limited, and a Vice President of The International
Nickel Company, Inc., assigned to executive support of major corporate activities.
He previously served eight years as Manager of the Development and Research
Division. He has been with International Nickel since 1927 and specialized in the
field of corrosion and corrosion-resisting materials. Inco's well-known corrosion
testing stations at Kure Beach and Harbor Island, North Carolina, were established
under his leadership.

A native of Ontario, Canada, Mr. LaQue received his Bachelor of Science De-
gree in Chemical and Metallurgical Engineering from Queen's University, Kings-
ton, Ontario in 1927, and an Honorary LL. D. from that University in 1964.

wheeling — in which display of imagination and new
approaches are favored in the "cool" atmosphere of
cultivated vagueness, which the speaker guesses Dr.
McLuhan would welcome and endorse.

It seems reasonable to recommend that our atti-
tude towards the nature of standards and specifica-
tions should remain fluid, so that the advantages of
any sensible approach can be examined and utilized
on a rational basis, in what Dr. McLuhan might de-
scribe as being a "cool" way to do it. We must,
however, continue to use the "hot" line whenever it
is impossible or impractical to employ the "cool"
approach and when there are no reliable means
either to define adequately the circumstances of the
intended use or to measure performance capabilities
closely enough to permit the use of a performance
standard in preference to a descriptive one.

The tremendous capability of the National Bu-
reau of Standards, as represented by its staff and its
new facilities on display on this occasion, is being
applied more and more to the development of new
and better means of measuring performance as well
as properties of materials and things that enter
world trade. This is bound to accelerate greater use
of performance as compared with descriptive stand-
ards and specifications, and thus we shall feel more
and more at home with our standards in the new
and "cooler" world in which we are going to be
living.

T have some additional comments pertinent to
some of the questions raised this morning and com-
ments made.

Technology flows in world trade through the sub-
stance of engineering and material standards and
methods of test, which include the distilled product
of the tremendous amount of research upon which
these standards are based. This will be a means by
which the developing nations can be given the ad-
vantage of the technology of the nations in which
the most sophisticated standards originate and ap-
pear in their most highly developed form, most use-
ful to developing nations — that is, international
standards. This requires, of course, the existence or

cultivation of an ability to make use of knowledge
provided in this form to the developing nations.

Systems of Measurement

I have another comment dealing with occasional
presentation of statistics relating world trade to sys-
tems of measurement. Statistics on possible effects
of systems of physical measurement on international
trade ought to be refined, to make a proper distinc-
tion between items where the size module or system
of measurement is likely to be important — for exam-
ple, a component of manufactured goods as distinct
from a complete assembly such as an automobile or
a machine, and as distinct from those where no
significant effect is likely such as foods, fuels, and
raw materials.

It is easy to understand that the problems pre-
sented by a change in the system of measurement
will be least in the case of measurements of weight
and volume and greatest in the case of linear meas-
urements as applied to machine components, and
here the problem is not so much one of the units
used for measurement as it is the size that is meas-
ured. We speak of international cooperation in
achieving uniformity in the realm of measurement
and I would hope that we could look forward to a
lot of give and take, in which the module sizes al-
ready well established with the one system might be
accepted in other areas in return for the acceptance
of the unit of measurement on an internatioal scale.

I recall that in Mr. Wynn's paper he referred to
the desirability of bringing to bear on safety stand-
ards the accumulated knowledge, wisdom and expe-
rience of every country, rather than to develop such
standards on an individual country basis. I think this
is merely an extension of what I believe is the most
important factor in the development of safety stand-
ards in any country, which is not to waste time de-
bating where the dominance of development of such
standards should rest, but to try somehow to find the
best way to organize competence from every availa-
ble source.

57

Dr. Astin: Our next discussant is Mr. Samuel H.
Watson, who is Manager of Corporate Standardizing
of the Radio Corporation of America.

Mr. Watson: Dr. Astin, distinguished guests, both
from our many friendly countries abroad and the
United States:

Standardization is recognized and firmly estab-
lished as an essential function in government, in the
military and in industry. My identification is predom-
inantly with industry, where the pursuit of standard-
ization can be difficult, costly, and limited in effec-
tiveness unless it is a team effort which includes
Government and the Department of Defense. The
areas of mutual interest are extensive. Teamwork is
in effect in many committees at the national level and
because it is, more and more standards are appearing
with a stamp of universal approval and acceptance.
They are the product of hard-working, objective, and
highly dedicated people; they are truly United States
of America standards. They clearly identify United
States of America positions on the subjects resolved,
and they equip U.S.A. delegations well with the
documentation and the authority needed for effective
participation in international standardization.

Coordination of Standards

Thoroughly coordinated standards are needed in
greatly increased numbers. To this end, the function
of the reconstituted American Standards Association
under the new and appropriate name, United States
of America Standards Institute — if its function can
be briefly stated — is: "to provide the coordination,
the procedures, the administration and the central-
ized services needed to accelerate the production
and maintenance of United States of America stand-
ards and to establish and maintain appropriate USA
participation and effectiveness in world standard-
ization." The capacity of the Institute to carry on
this important task will be markedly increased with
the granting of the proposed Federal charter.

Standards as Aids to Communication

The standards in greatest need internationally are
those that can make a contribution to improved

communications, a contribution in each case that is
worth the effort and expense required to bring it
about.

One of our great international standards, a boon
to communications and world trade, is the Gregori-
an calendar. Occasionally a proposal to change it is
publicized. Perhaps the change is convincingly ex-
plained as one offering some improvement in com-
munications. However ; since the existing calendar
is working so well and since it took almost 400 years
to get it into universal use, it is not likely to change in
the near future.

In any avenue of international communications,
where all those involved readily understand one
another, further purification of the basic standards of
communication is not likely to affect world trade to
any measurable degree. Conversely, changes in exist-
ing standards or newly introduced standards which
can substantially speed-up and sharpen understand-
ing among the representatives of different countries
can have far-reaching effects upon world trade.

Such standards are a most favorable influence to-
ward improved utilization of world manpower and
material resources. Standards in this latter category
are the breakthroughs, the difficult standards to
come by. Included would be any standard, practice,
or procedure that softened the greatest obstacle in
the conduct of international transactions — the lan-
guage barrier.

Perhaps the near future will bring an ingenious
way of accelerating the already somewhat advanced
merging of languages. Probably few of us in the
English-speaking countries realize how much French
we know until we thumb through an English-French
dictionary. In the same vein, if others share my
experiences, it is disturbing when using an English
dictionary to note how much English we do not
know.

I stated that standards that improve communica-
tions are most important. Through them, the peoples
of every nation will better understand and better
evaluate the standards and offerings of other coun-
tries; each in terms of its own economic needs and
preferences. As a result, it is likely that a degree
of variety and not global sameness will continue to
prevail.

The trends in color television preferences in the
countries of Europe today provide an excellent ex-
ample. Color television receivers will be powered by
a variety of voltages and frequencies, the pictures
will contain a varying number of lines per frame,

58

SAMUEL H. WATSON is Manager of Corporate Standardizing, Product Engi-
neering, of the Radio Corporation of America, an activity with which he has been
intimately concerned since 1944. Beginning his engineering career with General
Electric Company, Mr. Watson joined RCA in 1929, engaging first in design and
field engineering. During the war, he served as Project Engineer on vital military
communications equipment, including radar.

Mr. Watson, is a Senior Member of the Institute of Electrical and Electronic
Engineers, and charter member and Fellow of the Standards Engineers Society. In
recognition of his service to the voluntary standards movement through leadership
in the actual development of standards, that organization awarded Mr. Watson its
ASA Standards Medal in 1962.

Mr. Watson was the U.S. Representative to the ISO Committee on Drawings in
Geneva, Switzerland, that year, and was Chairman of the U.S. Delegation to the
meeting in Budapest, Hungary, in 1965.

256-707 0-67— 5

and the broadcast signal standards will conform to
one of possibly three different systems.

Importantly, however, the basic standards of
measurement are essentially identical. This enables
all the countries of Europe, regardless of power,
broadcasting, and receiving practices to use the same
standard materials and components in the manufac-
ture of television equipment.

Although the European color television receiver
owner may not have access to certain programs, he
can fully enjoy, in the programs he does receive, the
reliability and fitness-for-purpose developed in the
United States over a number of years of high vol-
ume color TV component production and field ex-
perience.

Critical Approach to Standardization

I stated that standardization is recognized and
firmly established. This means that it is here to stay,
and more and more will be expected of it in govern-
ment, in the military and in industry. Funds and
management support for standardization are being
made increasingly available. With them will come
demands for high performance levels; the maxi-
mum of effective standardization for each dollar ex-
pended. The standards engineer of the future, like
many today, must be a very competent fellow with
his feet firmly on the ground, a healthy and con-
trolled enthusiasm for standardization and a ca-
pacity for effectiveness with people as well as with
technical problems and situations. The standardizer
who waves the banner and gets carried away will
require increased restraint.

In recent months, in my reading, a new stumbling
block has been added; the word "Hertz." I refer

to the adoption of Hertz for use instead of CPS
(cycles per second) and not to the well known
automobile rental agency. In the current issue of
Electronic Products, November 1966, Mel Mandel,
Editorial Director, writes under this heading: "Read-
ers favor CPS over Hertz two to one." The editorial
is interesting in its one page entirety, and I quote
this segment:

"When so many company presidents, vice presi-
dents for engineering, general managers, chief en-
gineers (and two physicists with the National Bureau
of Standards) vote (three to one) against Hertz, it
is obvious that our representatives to the Internation-
al Electrotechnical Commission, where Hertz was se-
lected, did not properly understand the people they
represent. Should we use a little more democracy in
selecting our international technical negotiators?"

It is not my purpose in this reference to imply a
personal position but rather to re-emphasize that
management is becoming more and more critical of
the standardization function and of the standardizers.
The consensus principle is going to require more
surveillance. The consensus in the future must be
consistently real and contain an "engineered compo-
nent" of smaller size.

I consider it an exceptional honor to have been
invited here today to participate in these historic
dedication ceremonies and to mingle with so many
fine people from so many great countries. As they
have in the past, these great laboratories in their
new, enlarged, and modernized setting are destined
to continue as a tower of increasing strength in
support of our United States of America standards
program, nationally and internationally.

60

Dr. Astin: Our final speaker is Mr. C. H. Sharpston,
who is the Secretary-General of the International
Organization for Standardization (ISO).

Mr. Sharpston: Thank you, Dr. Astin. I wish to
touch rapidly on three matters in the time at my
disposal. The first is the general way in which the
work of ISO is carried out; secondly, some Govern-
ment legislation; thirdly, the interaction of standardi-
zation work at three levels — national, multinational
regional group, worldwide.

International Organization for Standardization

The impact of ISO and IEC activities on world
trade is greater than would be indicated by a recital
of the nearly 1,000 Recommendations which have
been published and almost as many Draft Recom-
mendations now in the pipeline. This is a conse-
quence of the way in which the work is organized.

In choosing its delegation to participate in our
Technical Committees and Subcommittees, each na-
tional standards institute calls on experts from pri-
vate industry, (as consumers as well as manufactur-
ers), by virtue of the relationship which links the
Institute to industrial companies and manufacturers'
associations. It can and does include, when appro-
priate, representatives of research laboratories, Gov-
ernment Departments, consumers' associations, and
so forth. The composition of a national delegation
is altered where necessary from meeting to meeting,
in the light of the agenda.

In the give-and-take of international negotiation
within the Technical Committees, delegates obtain
first-hand experience of the way world trade can be
hampered by the absence of international standards,
and likewise of the difficulties in achieving such
standards. They carry this experience back into their
normal professional work as well as contributing
their practical wisdom to the international recom-
mendations for standardization.

In the last analysis, the scale of our activities in
ISO and IEC, and our effectiveness, depends upon
the national Member Bodies. It was they who con-

stituted our organizations originally, it is they who
finance our work, and exercise control of policy.

My colleague, Louis Ruppert, the General Secre-
tary of IEC, is here with us, and he can speak more
particularly about his organization. As far as ISO
is concerned, national Member Bodies fully agree
with Mr. Wynn that we have not grown recently as
fast as our responsibilities. They have recognized
this in the most practical fashion, by voting funds
for 1967 which are more than double those of 1966.

A greatly strengthened staff will not only enable
us to process more Recommendations, doubling and
then redoubling the output of recent years within
24 months; it will also make possible a more skillful
coordination of the work of our many Technical
Committees and a more sensitive planning of our
forward program to match the needs of world trade.

Some 20 years of experience bear witness to the
fundamental soundness of our organizational struc-
ture, to its flexibility and its adaptability. If
Mr. McCune is right, we might have to be 10 times
as active by the early 1970's as we are today, I don't
know. What I do know is that, provided industry
and governments agree and make the resources
available, ISO will measure up to that challenge.

Incidentally, Mr. Wynn mentioned that the Soviet
Union and other countries of Eastern Europe do not
hold the secretariats of many of our Technical Com-
mittees. That is true, but whatever the historical
reasons for this state of affairs, it does not represent
today a lack of confidence in the value of ISO's
work. It is no secret in fact, that these countries
desire to take on more such secretariats as the
opportunities present themselves.

There is a solid foundation of international rec-
ommendations in the basic fields of terminology,
units, symbols, methods of measurement, documenta-
tion, classification, etc. This work is continuing. In
the field of applied standards, the record is admittedly
more patchy. It does, however, include many Rec-
ommendations relating to physical, mechanical and
chemical methods of test; methods of sampling and
quality control; safety standards; product quality and
"fitness for purpose." My list is not exhaustive.

As one of the means whereby technology is
diffused from industrially advanced countries to de-
veloping countries, the work of our Technical Com-
mittees and the resultant ISO Recommendations play
an important role. The developing countries par-
ticipate in this work to the extent of their capabilities
— and as consumers where they may not be produc-
ers. We also have begun to hold seminars and con-

61

C. H. SHARPSTON is Secretary General of the International Organization for
Standardization (ISO). During the war, he served as Assistant Director of Plan-
ning, Programmes and Statistics in the Ministry of Aircraft Production, and was
subsequently concerned with matters relating to the economic recovery of post-war
Europe.

Mr. Sharpston's industrial experience was with the English Electric Company
and more recently with a member company of the Joseph Lucas group. His work
has encompassed market research, sales forecasting, export projects and budgeting.
He has dealt extensively with overseas negotiations relating particularly to the
European Economic Community. He has spent the past few years as Director and
General Manager of two subsidiary companies of Joseph Lucas (Industries) Ltd.
in Brazil.

Mr. Sharpston received his education at St. Paul's School, London, and at Cor-
pus Christi College, Cambridge, where he obtained a first in mathematics and
economics.

ferences to guide the newly developing countries in
standardization matters.

Government Legislation

Next I want to take compulsory standards, where
safety, health, and public amenity are involved. At
the national level, government departments will gen-
erally draw heavily on outside advice about the
technical content of legislation in this field. Add the
extra dimension of a world community of trading
nations and you need to think a bit more carefully —
how to organize the preparation of such legislation,
in order to achieve an organic international whole.
The commonest approach is to move on from
established national legislation to inter-Govern-
mental negotiation aimed at reconciling the national
differences.

The greater the technical content of such legis-
lation, the more I would question the efficiency
of this procedure. It seems to me that an alternative
approach should be adopted more frequently. This
is, to begin by ironing out the national differences in
the purely technical aspects, within the non-Govern-
mental forum of ISO and IEC. The component of
expertise in public administration can be introduced
at this stage quite effectively by having government
officials as advisers to or members of national dele-
gations in our Technical Committees.

When the draft Recommendation emerges from a
Technical Committee, we have a period for the fullest
consultation of all interested parties, prior to sub-
mitting it to our Council for approval. In the class
of standards which I am discussing, governments as
such would be the most interested parties. By the
time ISO published a Recommendation, Govern-
ments could nearly be ready with draft legislation to
submit to individual legislatures. I am aware that
this kind of legislation is by no means non-political
and non-controversial. That is the case however,
whichever approach is adopted. I wonder how many
of you agree with my ideas.

Coordination of Standardization at
Various Levels

Thirdly, there is the issue of standardization at

national, regional, and international levels, and the
best way to coordinate them. There can often be a
basic dilemma. The smaller regional groups are more
cohesive, and likely to be more active and work
more quickly than a worldwide organization. On
the other hand, fully international standards benefit
these groups most in the long run, and a set of dis-
cordant regional standards may actually make it
harder to agree subsequently on an international
standard.

In parallel with the work in Western Europe de-
scribed by Mr. Wynn, the harmonization of stand-
ards in Eastern Europe is undertaken within
COMECON and in the Americas by COP ANT—
the Commision Panamericana de Normas Tecnicas.
There is no simple solution, for we must recog-
nize that the pressures for action at the regional
level are often stronger than at the international
level. In most cases at the regional and the inter-
national level, we are seeking to iron out differences
between national standards which already exist. I
can only suggest a complete flow of information
from the various regional groups to ISO. If we see
that the work is moving towards a consensus in
a given sector, well and good; if it seems to be
moving on a collision course, we could discreetly
drop some words in the appropriate ears.

The great challenge, however, lies in the newer
technologies and the new developments within older
technologies — the challenge, to write truly interna-
tional standards from the start; instead of several
national standards. I would contend that the best
hope of success in these cases is to go clear-sightedly
and with firm purpose for negotiation at the inter-
national level only.

Dr. Astin: Thank you very much, Mr. Sharpston.
I am sure that there are a lot of questions remaining
but I will have to ask you to refer your questions
to these gentlemen at the reception this evening.
I would like to thank all of you for participating,
and most particularly to thank the speakers for their
most interesting contributions.

63

Banquet Program

Chairman: Mr. John T. Connor, Secretary of Commerce

Secretary Connor: In this nation, beginning around 1950, a few people outside of
those directly engaged in the work began to realize the significance and the impli-
cation of the progress being made in the field of science and technology. At about
the same time, a few others began to realize the great importance of international
trade, and began to talk about the importance of growth in international trade, and
the absolute necessity for broadening the area of free trade on a fair and reciprocal
basis.

Still fewer people in this country combined those interests and those under-
standings and articulated them in the context of the subject of this symposium: the
effects of technology on international trade. One such individual — and an excep-
tional one — is here with us this evening. He is Vice President of the United States.
May I present him to you now: The Vice President.

65

HUBERT HORATIO HUMPHREY, Democrat, of Waverly, Minnesota, was born
in Wallace, South Dakota, on May 27, 1911. Mr. Humphrey received a degree
from the Denver College of Pharmacy in 1933, his B.A. degree from the University
of Minnesota in 1939, and his M.A. from Louisiana State University in 1940.

He was elected Mayor of Minneapolis in 1945 and 1947. In 1948 he was
elected to the U. S. Senate and re-elected in 1954 and 1960. His Democratic
colleagues in the U. S. Senate selected him as the Assistant Majority Leader in
1961 . In 1964 he was elected Vice President for the term beginning January 20,
1965.

He is President of the U. S. Senate, a member of the Cabinet and National
Security Council, Chairman of the National Aeronautics and Space Council, Chair-
man of the Peace Corps Advisory Council, Chairman, National Council on Marine
Resources and Engineering Development, Honorary Chairman of the National
Advisory Council to the Office of Economic Opportunity, Chairman of the Special
Cabinet Task Force on Travel USA, member of the Board of Regents of the
Smithsonian Institution, and Chairman of the Cabinet Task Force on Youth Oppor-
tunity. At the request of the President, the Vice President has helped coordinate
and implement the Federal government's responsibilities in the areas of civil rights
and poverty.

Speaker: The Vice President of The United States, Honorable Hubert H. Humphrey
Address: Technology and Human Betterment

Vice-President Humphrey: Thank you, Mr. Secretary, you have an imposing list of
participants in this conference. By the time it is done, I am sure that just about
every conceivable aspect of technology and trade . . . technology and competition
. . . technology and investment . . . technology and growth will have been examined
and discussed.

I am also aware that the so-called "technological gap" between the United
States and other nations — particularly our Western European friends — can hardly
be escaped these days. Each day there seems to be a new proposal — and some of
them have been good ones — toward closing that gap. If there is a technological
gap, there is no gap in the information about it. Therefore, rather than enter into
any technical discussion this evening, I would simply like to leave behind a few
general observations and ideas.

First, although some people deny it, I do not dispute the fact of a tech-
nological gap. I know that all the statistics indicate that we in the United States
have commanding leads over Western European nations in many fields — especially
in computer technology and utilization.

But we have advanced technology in large part simply because our industry,
which exists in many cases on a far larger scale than European industry, has had
the need for it. Supply does follow demand.

Proposals for Closing Gaps

I think by far the most promising proposals for closing the American-Euro-
pean technological gap have been those such as Prime Minister Wilson's on Mon-
day for a European Technological Community. "If Europe — which has already seen
the benefits of a European Economic Community, a Coal and Steel Community,
and an Atomic Energy Community — were to pool her technology in a similar way,
I have no doubt that the gap would already be a long way toward being closed.

The very fact of entry into the European Communities by Britain and her
EFTA partners — and eventually perhaps by others — would help create an even
larger European market and larger industry able to finance and sustain advanced
technology, along with the necessary research and development. And from the
general need for such technology, I feel sure it would follow.

The Rich-Poor Nation Gap

This leads me to my second observation: Namely, that economic integration
and the creation of larger, continental markets — all over the world — can be a
powerful force for closing any technology gaps.

It seems obvious, but too often overlooked, that small and poor nations stand
little chance for economic sustenance if they do not seek economic integration — or
at least, close economic cooperation — with their neighbors. This is beginning to
happen in Latin America, Asia and Africa, but not nearly rapidly enough.

I am pleased to see that "Technology and the Developing Countries" will be
one of your subjects tomorrow.

Long after any North Atlantic technology gap is closed, it will be the business
of the Atlantic nations to try to close the far more dangerous rich-poor nation gap.
We in the rich nations must begin taking more active steps now to help the poorer
nations build their economies, create broader markets, and develop their own tech-
nologies.

67

I do not mean that each developing nation, and its economic partners, will
need the capacity to produce and market sophisticated IBM systems. I do mean
that, without trained manpower and the ability to enter the technological age, the
developing nations will not only be unable to compete in world markets but that
the resulting political and social unrest in these nations will be a threat both to
their own security and ours.

The Proper Ways to Use Technology

And this leads me to my third general observation: That we all ought to do a
little more thinking about what technology is for. If technology is used just to
construct more impressive pieces of hardware — without resulting human benefit —
then it will be wasted.

I believe that today we have the technological capacity already at hand: To
rebuild the decaying central cores of large cities all over the world; to provide
decent and reasonable housing on a wide scale; to lift primitive agriculture into the
modern day; to compress the time scale for nations with catching up to do; to
master our physical environment before it masters us; to end the coexistence of
starvation and abundance on the same planet.

In my view, the real "technological gap" is between our technological capac-
ity and our application of it to social needs. These needs — such as education,
public health, recreation and transportation — exist in every part of the world.
Meeting these group needs, however, is quite different from meeting individual
needs such as for automobiles, clothing, or electrical appliances.

Old ways of doing things simply won't do the job. We need new mechanisms,
new ways and means for bringing technology into the market place of public
needs.

Constructive New Partnerships

Here in our country the model may lie in the constructive partnership of
government, industry, labor, and the university that has been so successful in our
space program. The talent and resources of all these elements in American society
brought to bear in an efficient and coordinated fashion, have moved us forward in
space far more rapidly than we would have hoped even a few years ago.

We have seen, too, what government research and development contracts —
given to the university and to private corporations — have produced in overcoming
scientific and technological obstacles in a remarkably short time.

The same partnership concept ... the same "systems approach" . . . the same
investment in research and development, applied to other public needs, may prove
to be the way in which our rich nation may finally be able to overcome economic
and social problems which have been generations in the making.

I believe, too, that private industry, acting on its own, can be a powerful force
in overcoming these problems. In the United States, a good deal of our tech-
nological capacity lies in private industry. In other countries, this situation often
differs.

I know from personal experience that American business today is demon-
strating a social conscience. This has been shown again and again in such areas as
equal employment opportunity, retraining of workers, and hiring the handicapped.
Often as not, public service has also turned out to be profitable. I think that
American private industry — operating in a competitive environment which pro-
motes efficiency — can profitably enter other areas of public need, providing educa-
tional services, slum rehabilitation, and such things as information systems.

68

Where these things may not be profitable, I believe we in government should
do what we can to be of help until they become so. (But I have the feeling many
of these things can be profitable from the start.)

Today we are putting to use in government many of the modern management
techniques already used in American industry. In formulating federal programs
and in organizing ourselves — such as in the new Department of Housing and Ur-
ban Development, and of Transportation — we are increasingly concerned today
with attacking our national problems with the highest degree of coordination and
cost-effectiveness. We have for example, with the creation of the new Department,
begun to consider transportation as the problem of how to move men and materi-
als most effectively, rather than the particular problems of railways, airlines and
highways.

The new Demonstration Cities Act, passed in the last Congress, is our first
legislation which attempts to pull together all programs for the city — programs for
economic opportunity, for housing, for clean air and water, for social welfare, for
highway construction, for neighborhood renewal, and so on — and bring them to
bear together in the right mix, in the right place, at the right time to best improve
the urban environment. Up until now these programs have too often been adminis-
tered without regard to their relation to each other, or to their order of priority.

And both the partnership concept and systems approach have been put to
work in the war on poverty — part of which is managed under contract by private
American corporations. In California my friend Governor Pat Brown — working
with aerospace companies — has made a promising beginning at the state level in
applying these approaches to problems of transportation, garbage disposal, crime,
and paperwork.

We are just beginning to utilize our technological capacity for human benefit
here in the United States. We are learning. But, during the learning process, we
still — as the world's most technologically advanced society — have a responsibility
to help create human benefits in other places by making our knowledge more
widely shared.

How to Transfer Technology

Technology moves in the form of products and services that nations ex-
change. It moves through patent royalties and licensing arrangements. It also
moves in textbooks.

I have noticed that while a breakthrough in science flashes quickly around the
world, a breakthrough in technology may take years to find its way to a place of
need. What we should seek, therefore, are rules and practices to help speed the
flow of technology, not slow it down or stop it.

I know the argument that technology carefully gained should not be easily
shared, lest hard-earned competitive advantage be lost. The argument against shar-
ing of technology, it seems to me, is not unlike the argument against liberalized
trade. But in technology, as in trade, the benefits of openness and free exchange
would seem to outweigh any loss of temporary, protective advantage.

I should think that an international patent system, for instance, would go a
long way toward safeguarding ownership of valuable technological processes with-
out burying each nation under paper.

And it seems clear to me that the United States' own long-term economic
interest dictates that our trading partners should develop strong, tech-
nologically based competitive economies.

69

Stemming the Brain Drain

Technology also moves in the minds of people who travel from one country
to another. Some travel to teach, and some travel to learn.

When students have been trained in another country and then remain there to
fashion their careers, we are faced with one element of what is the now-famous
"brain drain."

There are thousands of young scientists and engineers working in the United
States who came here to learn, but have stayed to earn.

If it is any comfort to those nations which have lost the services of their
talented citizens, they should know that we have experienced a comparable situa-
tion in the United States. Some of our states and regions graduate more Ph.D.s
each year than they employ. There is a "brain drain" from our Midwest to our
East and West Coasts. We deplore this. But from a broad, national point of view,
we can at least take some comfort from the fact that the United States as a whole
is richer for this new talent.

There is no comfort at all for the developing country desperate for trained
manpower when that manpower is swallowed up here. These are precious human
resources they cannot afford to lose.

How do we reverse this flow?

First of all, I take it for granted that good, technically trained people do not
turn away from their homelands for money alone, or for better living conditions
alone. Any good man wants to be where the problems are and where he has a fair
chance of solving them. He also wants to utilize the most modern equipment and
facilities.

There are some things we can do. I believe a great part of the problem lies in
the educational systems of the industrialized countries. Too often, we offer disci-
pline-oriented — rather than problem-oriented — education and training. Quite prop-
erly we emphasize the "ics" — physics, optics, nucleonics. I believe we must empha-
size, too, the "tions" — education, transportation, nutrition, communication,
irrigation — the things needed in developing countries — so that both our own citi-
zens and those of developing nations can acquire the useful skills of nation-build-
ing.

I think, too, that we can help draw these valuable people homeward by mak-
ing available to their own nations equipment and facilities that they have become
accustomed to here. Our government agencies, our universities, and private in-
dustry are all topheavy with equipment which is perfectly satisfactory for skilled
use, but which has been superseded by the next-generation model. As chairman of
the Aeronautics and Space Council, I have made it my particular business, for
instance, to see that equipment which has served its purpose in our advance
research and application in space has been put to good use elsewhere.

We can help by working with the developing countries to insure that too high
a percentage of their students do not come to the United States to acquire skills
which have no relation to the priorities at home. We can also, quite practically, do
what we can to help establish institutions in their home countries which will give
these young people the skills they need without leaving home in the first place.

Flexible Approaches

There is the across-the-board need to help build the technologies of the have-
not nations so that their talented people will have sufficient daily challenge. It is
clear that unemployed or underemployed scientists, even if they do not leave their
country, pose political and social problems. In all we do to raise technological

70

capabilities around the world, and to use those capabilities for human benefit, I am
convinced that we should not become bound by doctrine, dogma, or ideology.

In the United States there were any number of people who argued that there
was no way to undertake a major effort in space except under complete govern-
ment auspices. Yet, as I have related, we have been successful with another ap-
proach. I am equally sure that the approach we took would be a dismal failure in
many other countries, because of the varying strengths and relationships in their
societies.

Opportunities for Business

We need to find out what works, and use it. I can think of a number of
opportunities, not tried or barely tried.

For the business executives here tonight: I believe private corporations should
think about establishment, with other corporations — regardless of their nationality
— of joint training institutes in talent-short parts of the world.

I don't mean that you should establish your own private foreign aid programs
(although I'd be in favor of that too). What I see are cooperative arrangements
which meet the intellectual needs of the people being trained . . . which help meet
the national goals of the country in which the institute is located . . . and the
legitimate financial objectives of the private or public enterprise company which
sponsors it.

Opportunities for Universities

To those of you from universities: I would like to see schools established by
you, on your own initiative, devoted to city-building, to agricultural development,
to modern management. Why can't we export the essence of the Harvard or Stan-
ford Business Schools?

I believe that American and European universities — increasingly breaking out
of isolation from their own societies — should try to meet as well the human needs
of the people living in the forgotten two-thirds of the world.

Opportunities for Foundations

To those of you from private organizations and foundations: What opportuni-
ties do you see? Here in the United States we have a National Academy of Engi-
neering. It took us a long while to get it, but now we have it.

I see no reason why the Academy could not serve as a clearinghouse in
helping to set up similar engineering institutions in other countries, working on
public problems.

Opportunities for Government

To those of us in government: I think each of us, in our respective govern-
ments, must seek new ways to use technology constructively.

The United States government, in this past year, has embarked on new inter-
national programs using technology in the fields of health, of education, and of
agriculture. We mean to expand those programs. We have taken steps to remove
barriers to the flow of scientific and technical information and instruments to and
from our country. We have increased our programs of international exchange. But
I have no doubt that we must do much more, as other governments must do much
more.

I believe that we should be particularly receptive to proposals from other
governments, from international organizations, from private companies or groups
of companies, from any source, in fact, which wants to put technology to wider and
better international use.

71

The least we can do is to reward initiative by others, and to remove unneces-
sary obstacles, when a good idea turns up. (And if the Americans in the audience
have any doubt about where to submit their good ideas, I would refer them to Vice
President Humphrey.)

The Need for Action

Finally, may I make this observation: We can perceive today the general need
for . . . and the genuine benefit from the building of technological strength in every
country of the world.

We can also begin to perceive the ways in which this can be done — a number
of them have been discussed at this conference. What remains to be done is for all
of us to act on our knowledge.

As Thomas Huxley once said: "The great end of life is not knowledge, but
action." It seems to me an abysmal waste of time, of resources, and of energy
whenever men build barriers between themselves or when they miss the opportuni-
ty to improve mankind's general lot on earth.

Today we have the chance — through technology — to remove those barriers,
and to lift all our nations together by our action. / think we should get on with it!

72

November 17, 1966

Morning Session — The Impact of the Policies of Government on the Creation and

Use of Technology for Economic Growth

Mr. Stern: This morning's session will deal with the
instruments of government and how they may be
used to encourage the creation and the utilization of
technology. As co-chairman of the session and first
to speak on the subject, we have with us the Presi-
dent's Special Assistant for Science and Technology,
Dr. Donald F. Hornig.

Dr. Hornig: Ladies and gentlemen: It seems to
me this symposium is unique in recent times in that
it has brought together such a wide spectrum of peo-
ple of different persuasions to discuss these topics.

The title of this morning's session is "The Impact
of the Policies of Government on the Creation and
Use of Technology for Economic Growth." I hope
that our policies are more concise than that title.
Government policies have at times been widely mis-
represented, and discussed from many points of
view. It seems to me that it is important that we get
together for this kind of discussion.

We have with us this morning a distinguished
group of panelists and discussants; businessmen,
technologists and scientists. They are all a part of
this problem, which I do not think is well under-
stood. Nor do I think we have yet found, in our own
government at least, all the proper mechanisms for
taking into account technology as part of economic
growth. 1 hope that many aspects of this problem
will be aired and discussed this morning.

I regret not having been able to be with you to
hear yesterday's fascinating discussion, and I hope
you shall permit me to avail myself of the privileges
of a Chairman to say a few words on his own behalf
before getting discussion under way.

one with which my office has been very much con-
cerned, both domestically and internationally.

According to our Council of Economic Advisors,
something over one half of total economic growth
can be ascribed to the introduction of new technolo-
gy. Although economic growth may not in itself be
the end objective of a society, it is central to achiev-
ing most of the social goals and most of the material
goals. The technological input is central to the
progress of any country.

Broad Areas Involved in the Relationship

In thinking of what might be discussed this morn-
ing, I hope the discussion will cover the full range of
the inputs that go into this problem, and not be nar-
rowly focused. There are surely a number of ingre-
dients of technological and industrial innovation
with which governments must be concerned.

First, they must be concerned with the availability
of suitably trained people, not only scientists and
engineers but entrepreneurs, inventors and man-
agers. Secondly, they must be concerned that re-
sources for new technology are provided. This in-
volves risk capital or business credit on proper
terms, the availability of economic and financial in-
formation and the availability of scientific and tech-
nological knowledge to those who innovate. Also in-
volved are such matters as the development of
markets for advanced products — and such markets
may be generated either by the existence of a taste
for advanced products in the society as a whole, or
more consciously by government procurement.
There is the matter, particularly in a free enterprise
economy like ours, of the creation of a climate for
innovation in a variety of forms. And each of these
are matters to which government policies can and
should be addressed.

The Relation of Technology
Growth

(o Economic

This general matter of economic growth, and the
relation of technology to economic growth, has been

Further, the Federal Government has a central
role — together with the states and communities — in
connection with education. It isn't just the question
of the mass education of people, but the kind of

73

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\

DONALD F. HORNIG is Special Assistant to the President for Science and Tech-
nology. He concurrently serves as Chairman of the Federal Council for Science
and Technology and Director of the Office of Science and Technology in the
Executive Office of the President.

Dr. Hornig's early career included research at Woods Hole Oceanographic Insti-
tution and leadership of a project group at Los Alamos Laboratory. In 1946, he
joined the faculty of Brown University, subsequently becoming Director of the
Metcalf Research Laboratory. He later joined the faculty of Princeton University
where he became Chairman of the Department of Chemistry in 1958 and first
incumbent of the Donner Chair of Science.

A native of Milwaukee, Wis. (1920), Dr. Hornig received his B.Sc. and Ph.D.
degrees in Chemistry from Harvard University. A Guggenheim grant and Fulbright
scholarship for research at St. John's College, Oxford University, England, fol-
lowed. Dr. Hornig was the first Bourke Overseas lecturer appointed by the Fara-
day Society. Some 80 of his papers in the field of physics and chemistry have
appeared in professional journals.

education which is provided at all levels. The gov-
ernment is concerned with the problem of develop-
ing the basic knowledge and understanding which
provides the raw material for innovation. In my own
thinking I draw a rather sharp distinction between
R&D per se and the innovative process. The two are
closely related but aren't necessarily the same thing.
The Federal Government now provides about 75
percent of the support for research in universities
which is primarily concerned with the development
of basic knowledge and the training of people. This
makes the whole higher education process a major
Federal responsibility. The Federal Government
must be concerned not only with the conduct of bas-
ic research but with the health of the basic research
establishment and, therefore, the health of the uni-
versities. There are many problems in carrying out
this responsibility.

The Interacting Roles of Government and
Private Enterprise

In our society, industrial innovation takes place
primarily in the private sector. The primary role of
the government, it seems to me, is to provide a cli-
mate for private initiative, and it does this through a
wide variety of processes. Innovation is affected by a
wide variety of governmental actions which aren't
themselves technical or scientific. For example, there
is no question but that in many industries the rate of
innovation is very much affected by the nature of
regulatory policies. Regulatory policies in the past
have been thought of from the standpoint of their
legal and economic consequences. I don't think
there has been very much thinking about regulatory
policies in terms of innovation. Additionally, tax
policies may be critically important to industrial in-
novation. Tax policies can be restraints and brakes
or can provide, as many countries have learned, in-
centives to innovation. The nature of anti-trust laws
and regulations and the ways they are enforced are
clearly important to the innovation process. It is im-
portant that we maintain an atmosphere and condi-
tion of healthy competition. On the other hand, care
must be taken in some cases that the anti-trust laws
not be used in such a way as to stifle innovation.

The purchasing policies of the U.S. Government,
which spends one seventh of the GNP, are impor-
tant in a variety of ways. In particular, the Depart-
ment of Defense and NASA together buy probably

$25 billion worth of highly technical products. Thus
their purchasing policies can have a very important
effect. I'm thinking, for instance, of such things as
the nature of the contracts, how they are written,
the use of incentive or fixed-price contracts, and so
on. These all affect the mode of conduct under the
contracts and the inducement to innovate.

Finally, there is the matter of new technology.
This has been generated in great volume, primarily
through the Department of Defense, the Atomic En-
ergy Commission, and the Space Administration. I
won't discuss this point further since it was so thor-
oughly covered last night. But it seems to me that
U.S. Government support of new technologies has
been effective because it hasn't just been an across-
the-board support of technology per se. It has cou-
pled the support of new technologies to urgent goals
which had to be met. I think this has been an im-
portant feature of the governmental effort.

An analysis of the mix of all of the things that
enter into the process of innovation has yet to be
produced, or if it has been produced, I wish some-
one would call it to my attention. I hope that, dur-
ing the course of the discussion this morning, some
light will be thrown on many facets of this complex
mix of factors, particularly in the context of a so-
ciety in which the government and industry play
complementary roles.

I think you know that the Department of Com-
merce, as its name implies, has a key role in these
problems. However, the problems cut across all
parts of our Government, so many of them can only
be dealt with at the level of the White House.

The Need for Close Industry-Government Dia-
logue

Before turning this session over to our co-chair-
man and to the speakers, I want to say that progress
in this direction — the development of wise govern-
mental policies — requires a good and close dialogue
between government and industry. One of my own
hopes is that we will improve this dialogue and I
hope to take some additional steps myself in that
direction. This symposium is one of the most impor-
tant steps I have seen recently in improving the dia-
logue and the conversation among the various par-
ties concerned with the creation and use of
technology for economic growth in all of our coun-
tries.

256-707 0-67— 6

75

Dr. Hornig: It is now my privilege to introduce the
first of our speakers this morning, Mr. Robert Major,
who is the Director of the Royal Norwegian Council
for Scientific and Industrial Research.

Mr. Major: It is a pleasure and an honor to address
this distinguished group on the important theme of
the impact of the policies of government on the
creation and use of technology for economic growth.

I will discuss this theme by trying to answer the
following questions: In the first place, what are the
main factors in building up national technological
research potential? And second, what is the role of
government in building up these potentials? That is,
how can government stimulate the creation and use
of technology for economic growth, and what do
governments do about it? Third, what should we ex-
pect governments to do in this field in the future?

Building National Research Potential

Let us briefly look at the factors which build up
the national research potential. There is a need for a
system capable of educating in quantity and in qual-
ity all personnel needed for national research activi-
ties and for industry, and for other activities making
use of research results. There is a need for funda-
mental research institutes in the universities, or as
separate organizations to pursue the search for new
knowledge, thereby also nurturing applied research
activities and giving inspiration to higher education.
There is a need for applied research institutes and
laboratories which can assist in solving the practical
problems which are faced by a government of our
time, and which can also help in the development of
production methods and of new products throughout
industry. There is a need for a technical information
system which brings an ever increasing knowledge
from national or international research to the people
needing it in the form and at the time they need it.

But all this is not enough. Knowledge acquired in
educational systems is only useful for economic
growth when the educated personnel learn how to
use it in industrial activities. And research itself has
no economic value until it has been built into new

processes or new products. There is also need for
dynamic industry which has the right structure and
management open to the exploration of research it-
self, sufficient risk capital, and a market big enough
for the product. Without such a dynamic industry,
even first class research itself would have no bearing
on the economic growth. It is further necessary to
understand the interplay of all these factors and to
create a natural climate for development of all these
factors.

Government's role in this picture varies from
country to country, depending on the degree of in-
dustrial development, on the national goals. I do,
however, think it right to say that in all countries
government's role is growing. This is partly due to
the growth of research activities, but also due to the
fact that it was not until lately that most govern-
ments have discovered the roles government could
and should play.

Let us look at the situation in regard to different
factors I just mentioned.

Planning the Educational Program

The most striking example of government growth
in the fostering of education is perhaps the develop-
ment of the educational system in Soviet Russia dur-
ing the last decades, which was so well described in
Nicholas de Witt's books. This is an example of
how a government decision, under that particular
regime, followed by long-term action, can change
completely one of the conditions for economic
growth in a nation.

In Western countries, education facilities have
traditionally been developed through an interplay of
initiative from private quarters, municipalities, states
and the national government. We all remember what
happened in this country after the first Sputnik in
'57. A strong government policy mobilized the
whole education system in a joint effort to expand
education in quality and quantity, an effort which
has had far reaching effects in this country.

The most striking recent work in this field in
Western Europe has in my view taken place in the
OECD. In cooperation with the Committee on
Scientific Personnel, the Directorate of Scientific
Affairs of OECD has built up a milieu which has
made thorough studies of most of the relevant ques-
tions which have a bearing on the supply and de-
mand and also use of scientific and technical person-
nel in many of the countries.

The OECD's work has very strongly influenced
educational policies and planning in most European

76

ROBERT MAJOR is Director of the Royal Norwegian Council for Scientific and
Industrial Research, an organization which he has headed since its formation in
1946. Under his guidance, the Council has established a number of specialized
research institutes, including the Norwegian Institute for Atomic Research which
operated the Dutch-Norwegian Joint Establishment for Nuclear Energy Research
in cooperation with its Dutch counterpart.

As Norwegian representative to the OECD Science Committee, and earlier to
the OEEC Committee for Productive and Applied Research, Mr. Major has repre-
sented Norway at numerous international meetings concerned with scientific and
industrial research. In addition, he has served as a member of the Norwegian
delegation to the first and second United Nations "Atoms-for-Peace" Conferences
held in Geneva in 1955 and 1958.

A native of Oslo, Norway (1914) Mr. Major received his Master of Science
Degree from Oslo University in 1941 , then serving a period as Scientific Assistant
there. He saw war service with the Norwegian High Command during the period
1 94 1 -1945 , and was Secretary of the Committee for the Organization of Scientific
and Industrial Research in 1945 and 1946.

countries, and I think also it has had something to
say for work here. With the rapid growth and
change in the demand for various types of person-
nel, and in view of the long time it takes from the
decision to build an educational institution to the
time when new candidates have been educated, the
need for a national analysis of the comprehensive
future requirement of personnel and the need for
policy and planning by government, has now been
understood and, I think, accepted in practically all
the Western countries.

The rapid advancement of knowledge also de-
mands a constant change of curricula and new
teaching methods. This situation will demand, at a
growing rate, a re-education of people working in all
branches using science and technology. This will
probably mean that very soon a considerable part of
the population will have to use at least 25 percent of
their time for re-training all through their working
years. There is also in many countries the view that
more should be done in the educational system to
encourage the development of creativity.

The current explosion in education and the rapidly
growing need for increased investment in education
have made the role of government all the more im-
portant in all countries. Governments in Western
countries discharge their responsibilities in the edu-
cational section by various means. Sometimes it is
through the establishment and direct control of edu-
cational facilities; in other cases it may be by means
of financial contributions distributed through proper
channels or agencies to the educational establishment
run by states, municipalities, or by private initiative.

This growing demand and rapid change through-
out the educational field puts a rapidly growing
strain on government resources and initiative. No
country has yet reached anything like maximum de-
velopment and use of its talents. I believe that much
is yet to be achieved through an interplay of people
in government, in the educational system, in in-
dustry and in other activities needing trained person-
nel.

Fundamental Research

Fundamental research is, I think, now recognized
in most governmental circles as basic to the develop-
ment of new technology, and as a factor of impor-
tance for economic growth. The results of funda-
mental research are on the whole common property,
and it has therefore been recognized that govern-
ments must carry the main part of the financial re-
sponsibility for its pursuit. In spite of this economic
dependence, there has been a general understanding

for many years that decisions regarding how money
for fundamental research should be spent should be
left to the academic community.

During the last decade the pursuit of knowledge,
particularly in the physics field, has as we know de-
manded ever more expensive installations, such as
accelerators, radio telescopes, et cetera. We've got
"big science," which now in most countries takes a
growing part of the economic resources available for
fundamental research.

In advanced countries, between ten and twenty
percent of the overall R&D expenditure is now
used for fundamental research. This corresponds to
between .1 and .3 percent of the Gross National
Product. The development of "big science" has, par-
ticularly in small countries, but increasingly in the
medium sized and big countries, strained the finan-
cial resources for fundamental research. For the
small country it is now impossible to take part in the
forefront in all fields, and also for the medium sized
countries it is becoming more and more difficult.
This has created strong pressures for establishing
criteria for the allocation of resources for funda-
mental research. And as governments are the main
source of money this will of necessity force govern-
ments to take part in priority decisions.

I think so far too little thought has been devoted
to the situation which becomes more and more criti-
cal. Especially for the small countries, some re-
thinking and adaptation to the new situation seems
to be required. The general tendency is to try to
copy the big countries' research pattern and take an
active part in all fields. This will, to my mind, have
to be replaced by more modest and realistic goals.
There are still many fields of fundamental research
offering great scientific challenges which can be pur-
sued within a modest financial frame. In more ex-
pensive fields, there are possibilities for the estab-
lishment of cooperation with other nations.

I believe the time is right for government,
specifically in smaller countries, in close cooperation
with the representatives of their academic institu-
tions, to study how fundamental research in the fu-
ture can best be pursued for the benefit of the
country within the financial resources which can be
expected to be made available.

The Governmental Role in Applied Research
and Development Work

Government's role in the field of applied research
and development work falls mainly into three cate-
gories. First, in certain fields where government

78

has its own activities such as defense, government
will itself be responsible for the creation and use of
the appropriate technology. Second, as government
is interested in the over-all national economy, it must
also feel a responsibility for stimulating the creation
and use of technology all through industry, particu-
larly in those industries which are not in a position
to take the necessary steps themselves. Third, gov-
ernment is also responsible for development of a
general national climate conducive to the creation
and use of technology throughout society.

Fields of Government Influence

The technological fields where government is re-
sponsible for activities vary from country to country.
In all countries it includes defense. In many coun-
tries it includes telecommunication systems, power
supply, roads, railways, and also the search for and
conservation of natural resources, environmental
pollution, etc. In addition, of course, there are
the more recent programs such as those concerned
with space.

Governments usually apply two different meas-
ures for the creation and use of technology in these
fields — the establishment of government research in-
stitutes, and the contracting of research and devel-
opment programs to industry. The balance between
these two tools varies strongly from country to
country.

The establishment of government research insti-
tutes is the oldest method, and, particularly in coun-
tries without a heavy commitment in the defense
field, it still seems to be the more important one.
Many of these institutes have performed excellently.
I think, however, it is a general experience in many
countries that research doesn't always prosper in a
rigid government system. In some countries there is
a move to establish institutes of this type as semi-
governmental institutions, thus giving them greater
flexibility in their operations.

The contract system has been developed mainly
in countries with heavy defense and space commit-
ments. As you know, the United States now spends
approximately eighty percent of government R&D
funds for military and space purposes. About three
quarters of this money is used for R & D contracts
to industry. This represents more than fifty percent
of all R & D activities performed by industry. This
is a volume which is many times higher than the
total of all European R&D contracts of this type.
The impact of this on industries working for defense
and space, mainly the aerospace industries, is im-
mense and well known.

Influence of Military R & D on Civilian
Economy

The spill-over effect for civilian industry is, as we
know, difficult to ascertain and much debated.
Everybody seems to agree that there is considerable
and valuable transfer to civilian technology. How-
ever, they also agree that the transfer is not big
enough, leaving to the responsible government cir-
cles the problem of increasing this transfer through
the dissemination of reports, exchange of personnel,
etc.

I believe that a good many of the people in this
auditorium know more about this subject than I,
and I shall therefore not go into detail, but I would
like to mention that these types of R & D contracts
are very rare in many countries where the defense
activities are at a relatively low level and space ac-
tivity hardly exists. As many industries in these
countries have to compete in the world markets, it
has become a problem for those nations to find ways
and means whereby they can stimulate their indus-
trial technology to make up for this deficit.

This leads me to the next point — how the govern-
ment can stimulate creation and use of technology in
fields where government has no administrative re-
sponsibilities. The old established method for this
stimulation is the creation of government research
institutes working in specific fields like agriculture,
fisheries, raw materials research, and also the crea-
tion of institutes to establish national competence in
fields of general interest to industry, such as weights
and measures, standards, etc. We all know that
there is a great variety of examples of the high value
of activities in institutes of this character.

Research Associations and Sponsored Research
Institutes

A more recent development, which has taken
place mainly in Europe, is the establishment of re-
search associations. As is known, these work on mu-
tual problems for specific branches throughout in-
dustry. There are in Europe approximately four
hundred of them.

The volume of work in these institutes in the indi-
vidual European countries varies from a few percent
up to ten percent of the R & D work performed by
the industry as a whole. Most of the institutes have
a government subsidy varying from zero up to sixty
percent of the total income of the institutes.

A considerable portion of the activities of these
organizations involve technical information activi-
ties. The main purpose of the Research program is

79

to increase the quality of existing processes and to
improve the quality of existing products. The pro-
grams are therefore usually unspectacular in nature
and this type of laboratory has appeared to be use-
ful mainly in old established industries. The over all
usefulness of these institutions is debated. I think
that on the whole this is because many of them are
too small or have been established in industries
which they are unsuited to serve.

Since the last war there have been established in
many European countries sponsored research insti-
tutes of the Battelle Memorial type. They work
mainly for research-based competitive industries. A
good many of them receive financial support from
governments to enable them to establish competence
in fields that are considered to have a general na-
tional interest.

Method for Governmental Stimulation of
R & D in Industry

Particularly in countries with few R&D contracts
from defense, space and atomic energy, a need has,
as mentioned, been felt to compensate for the ab-
sence of spill-over effect such as benefits civilian in-
dustries in the United States and some of the other
countries. We can here on the whole distinguish
among three different methods which have been
taken by the government. First, the development of
a procedure whereby government agencies procuring
products of advanced technology are authorized to
give R&D contracts to national companies to en-
able them to compete on a more favorable basis
with the big international concerns. To administer
such programs effectively, the government agency
must build up a staff competent in long term plan-
ning, for the working out of specifications and
for handling of R & D contracts. The administration
of such programs also calls for the wise selection of
fields in which to encourage the development of na-
tional industries.

Second, in many countries, companies which have
valuable ideas for innovation are unable to finance
innovation costs or to get loans through the usual
credit institutions. To meet this situation, several
governments have established so-called development
funds, which function as a bank with risk capital,
giving loans to cover up to fifty percent of the devel-
opment cost of a project. When successful, the com-
pany will repay the loan with interest. When the
project is unsuccessful the loan will be waived. Some
organizations of this type also take an active part in
the exploitation process, like the National Research

Development Corporation in Great Britain, which
can draw on a government credit of up to
twenty-five million pounds. Others act like banks
and leave the exploitation to the manufacturing
company. Some of these new agencies seem to have
had success with several of their projects but it is
yet too early to judge their importance as a whole.

Third, in certain countries research councils or
similar agencies, which usually spend their money in
research institutes, have lately been allowed to
spend money also in industries with the aim of
building up national competence in new subject
fields, such as systems engineering and the like. Be-
cause of the government financing, there is usually a
requirement that the general results of these re-
search projects be available to other firms in the
country.

The above mentioned three procedures, R&D
contracts from government agencies to industry as
part of the buying procedure, the establishment of
development funds, and the use of government mon-
ey to build up technological competence in industry,
are on the whole relatively recent developments.

The ideal situation for a country is of course, that
industry is so strong and viable that this type of
stimulation is unnecessary. The stimulus is felt to be
needed partly because the financial resources of in-
dustrial units in many countries are too small to de-
velop competence in new technological fields, and
partly to compensate for the absence of the spill-
over effect which prevails in other countries. There
is, however, the danger that these measures can be
used to conserve industries which would never be
competitive, and they should therefore be used with
great care and wisdom.

Judging from recent trends it is, however, likely
that these activities will play an increasing role in
government policies to create and use technology in
the years to come.

The Need for Technical Information Centers

With the growing flow of technical information,
it is a problem, specifically for smaller firms, to
acquire all the information needed for their produc-
tion. In most countries, governmental or semi-gov-
ernmental organizations therefore have established
information centers and advisory services of various
kinds. There seems to be a general feeling in many
countries that compared to the money and effort
spent on research projects, the investment to make

80

sure that existing knowledge is being effectively used
in industry is much too low.

The Climate for Research

In addition to all these activities of a more con-
crete character that I have mentioned, governments
can stimulate technology and its use through the
creation of a general industrial climate conducive to
research activities and the exploitation of research
results. Activities of this kind include the develop-
ment of taxation systems with the right financial in-
centives, suitable patent policies, and general en-
deavors to remove obstacles such as customs
barriers, thereby creating bigger markets for the sale
of industrial products. These indirect general meas-
ures can have a profound influence, but I under-
stand that they will be covered later today and I will
not go into detail. I will just mention them as a very
important method in the hands of government to
stimulate the creation and use of technology.

International Cooperation and Government
Policy

One aspect of government policies for the crea-
tion of technology which will no doubt grow in im-
portance is international cooperation. I think it cor-
rect to say that the greater part of international
exchange and collaboration in the scientific and
technological field, both among scientists and com-
panies, has grown up without any government initia-
tive and will continue to do so. But with the growing
role of government in the national scene, govern-
ment policy will also have a strong and growing
influence on international activities. I can mention:
government policy for declassification and dissemi-
nation of reports from government financed re-
search; bi-lateral agreements between governments
for research cooperation in fields that require big
research investments, such as atomic energy, space,
et cetera; and multilateral cooperation in general in-
ternational organizations like the United Nations
and OECD, and in international research organiza-
tions like the European Nuclear Physics Organiza-
tion (CERN) in Geneva, or the European Space
Organizations, ESRO and ELDO.

I think that not all of these international activities
sponsored by governments operate quite efficiently,
but they serve their useful purpose for exchange of
information and make it possible for small and me-
dium sized nations to take part in "big science" ac-
tivity. I think, also, scientists usually find it easier to
agree than politicians and I believe that the interna-

tional atmosphere created by scientific cooperation
can be an important factor for the stimulation of
world trade.

The Technological Gap

I had intended here to discuss the so-called tech-
nological gap between the United States and Europe.
After the Vice-President's speech last evening, I
will, however, just say very briefly that it seems to
me we often think wrongly with regard to this gap.
To my mind, it is not so much a question of tech-
nology as of mentality and attitude. In your country
here you have quite an eye for the future; you have
a dynamic industry, and you have built up mana-
gerial skill and big markets. I think the difference
in all these factors is very much more important
to explain the gap than the difference in science and
technology. We need a better diagnosis of the tech-
nological gap between Europe and America before
we start to suggest remedies.

Overall Financial Resources for R&D

The growth of government activities in the re-
search and development sector demands increasing
financial resources. As you all know the total R&D
effort in the industrialized OECD country varies
from approximately one percent up to some three
percent of the GNP. Now these expenditures can be
divided into three categories: R&D expenditure for
defense purposes, which varies in the different coun-
tries from 0.1% to 1.6% of the GNP; government
R&D expenditure for civilian activities which
doesn't vary much at all — it is approximately 0.5%
or a little lower for all industrialized countries; and,
third, research and development expenditures in
the private sector, which varies from 0.3% to a little
over one percent of the GNP.

Now, taken altogether, government financial con-
tribution to the R & D effort varies from 0.5% to
approximately two per cent of the GNP. In percent-
age of gross national R&D expenditure, govern-
ment contribution makes up from thirty percent as
in the Netherlands, up to more than sixty percent,
as is the case in this country. All governments in the
advanced countries now see the importance of these
activities for the culture, for the economy, welfare,
and security, and are spending an increasing share
of national financial resources in this sector. But we
may, of course, ask how wisely do they spend their
money — what systems have they developed to evalu-
ate the programs and what is their efficiency in all
this work?

81

Efficiency of the Technological Effort

On the whole, I believe a historian some years
hence who will write about science in the present-
day society will find that the efficiency of the over-
all system was then not too high, although it varies
considerably from country to country. Most coun-
tries are still experimenting to find out how best to
organize themselves to evaluate programs, to estab-
lish criteria and priorities. They also must choose
the fields in which they wish to concentrate. This is
particularly true of the smaller nations.

Some countries have established a ministry for
science which is responsible for the broad policy
decisions. Examples are France, Germany, and for
a time, also, Great Britain.

Others find that research activities will have to
be an integral part of practically all the different
ministries' activities and find it difficult to concen-
trate the responsibilities in one ministry. Their solu-
tion is usually one or more national committees
for science policy close to the president or prime
minister, to give general advice. They leave ad-
ministration of programs to the different ministries
or established agencies. Examples here are in the
United States, Belgium and the Scandinavian
countries.

What seems essential in all systems is to develop
enough people with a thorough and broad knowl-
edge of how science works and how the results can
be exploited in industry, people who can serve in
government departments on advisory committees at
different levels, and in semi-governmental and indus-
trial research organizations. It is only through the
interplay of such people that good proposals for
government action can be worked out and wise de-
cisions reached.

If we see government's role in the creation and
use of technology in perspective, there has been a
rapid growth both in direct responsibilities, in the
allocation of money and in results obtained. It
represents, all together, I think, an impressive im-
pact. To my mind there is no reason to believe that
this trend will change in the immediate future. This
is a consequence of the growing complexity of life in
society and also of the inherent nature of science
and technology.

The growing reservoir of knowledge to be passed
from one generation to another and the better edu-
cation of a larger number of people needed for the
type of occupation we can foresee in the future so-
ciety, will increase the responsibilities in the educa-
tion sector. The need for ever more comprehensive

technological knowledge in all branches of industrial
life, the growing complexity of each subject and the
growing need for cooperation will increase the de-
mand for government measures to stimulate tech-
nological development.

Government's Future Role

What sort of technology-based activities govern-
ments will administer in the future is more difficult
to foresee. With China in the picture, it is most like-
ly that defense activities will continue. Space re-
search is most likely to continue, at least at its
present scale, unless joint programs should be es-
tablished with the Soviet Union, in which case a
good deal of the national prestige and competition
might disappear. Development of the fission process
for the production of energy seems on the whole to
be passing over to industry, but it is not unlikely
that demand for increased government support for
development of new sources of energy will be re-
quired in the future.

We have, I think, passed through an age of chem-
istry, we are in the age of physics, and I believe we
are on our way into a biological age. This will open
up new aspects and possibilities which may quite
drastically change our way of life. We must expect
that in the years to come we shall be thinking not
so much of our standards of living, but of our stand-
ard of life. Much more emphasis will no doubt also
be given to environmental research and the urban
problems, transportation systems, et cetera, and
in all these fields it seems likely that government
will have to be heavily engaged.

I think that in most countries there is need for a
much stronger harmonization of research activities
with the over-all national goals. Too many small
countries tend, in their research efforts, to copy re-
search activities of bigger countries, forgetting about
the high threshold value for realistic activities in a
growing number of fields. Considering the immense
effort put into the actual research work it will, to my
mind — with these problems of size, priorities, selec-
tion and choice that most countries have to face —
be necessary to devote greater efforts to the develop-
ment of well-conceived and realistic science policies.

In many fields the best results will only be
achieved when countries are brought together in co-
operation in a more meaningful and cohesive pat-
tern. Those countries which will be the most able to
master all these problems will to my mind have a
great advantage, both for economic growth and for
life in society as a whole in the years to come.

82

Dr. Hollomon: To continue our discussion of the
impact of policies of government, we bring to you a
person who has long been engaged in industrial ac-
tivity, and whose training is not in technology or
science. He is especially interested in marketing. Re-
cently, however, he has made two excursions into
the government realm. In one of these, he is serving
on a special panel that is advising the Secretary of
Commerce on the climate for invention and innova-
tion in our society.

A member of that panel said at one of its later
meetings, "I'm not sure that we should ever tell any-
body about the real result of our work because, you
know, there's a great story and myth going around
that all we have to do is to do lots of R&D, then to
give R&D away and to help people to trade, and
ultimately everything will work fine. Most of the
world believes that. Our real secret in this country is
the fact that a young fellow has a chance to go out
and start a small new business on his own without
having to work through established organizations or
the conservative constituencies."

Some of the panel thought, good humoredly, that
we ought to keep this report secret, because other-
wise we might lose our competitive advantage. We
decided to make it public and take the risk!

I would like to introduce to you Mr. Peter G.
Peterson, the President of the Bell and Howell Com-
pany.

Mr. Peterson: I noticed that we had some French-
men in the audience and if they won't mind I'll tell a
little story about the French acrobat, Blondeau, that
I hope helps me make a point about the lead of the
United States in technology.

As the story goes, Mr. Blondeau, the French
acrobat, was crossing the Niagara and he was not
only crossing it on a tightrope but he was carrying a
man on his back. There were a million-and-a-half
people watching this extraordinary feat of the

Frenchman, including the President of the United
States, the Prince of Wales and so forth. About a
quarter of the way across, the man who was on the
back of the Frenchman looked down at him and
said, "Don't you think that we should reconsider?
Don't you think that we should perhaps go back?"
At which point — roughly translated to suit my pur-
poses here today — Blondeau was reported to have
said, "Just because you're on top doesn't mean you
know where you're going."

So we need to remind ourselves of that.

Let me talk briefly about the panel that Dr. Hol-
lomon talked about. We spent eighteen months
studying innovation.* The chairman of our commit-
tee was Dr. Robert Charpie of Union Carbide. The
panel membership consisted of prominent men in
business, education and the professions.

R&D and Innovation

One of our early conclusions was that there had
been so much emphasis and so much impressive da-
ta on how much this country spends on research and
development that we wondered if there hadn't been
too much emphasis placed on that. So, early in our
study, we decided to make the distinction between
invention and innovation.

I want to make the important distinction that we
did between invention, which is to conceive — it's the
idea — and innovation, which is the using, the proc-
ess by which the invention gets translated into a
product and brought into the market place. And if
we're really interested in growth and the things that
affect the quality of people's lives, we emphasize
over and over again in our report that we really had
to concern ourselves with innovation, not just re-
search and development.

I'll make a perfectly obvious point now to those
of you who are sophisticated in business. We no-
ticed in our study that many people in government,
and to a certain extent in universities, tend to think
that innovation and R&D are the same phenomena,
and if you just have more research and development,
in some simplistic way — almost automatically — you
get more innovation.

So in our report we presented some distribution
of costs — as shown in Chart 1 .

We simply put together the experiences of our
panel members to make a point that we thought
needed making: that the businessman looks at the

* The full report of the Panel, Technological Innovation: Its Environ-
ment and Management, is available from the Government Printing
Office, Washington, D. C. 20402

83

innovation process as a totality, as a total venture,
not just as an R&D expenditure.

And that in many, many projects the research and
development, the idea stage, is really a small part of
the total investment. In the case studies we looked
at it was only about five to ten percent of the total
process. We said to ourselves, therefore, if you're
seriously interested in innovation you really can't
pretend that the only incentives you need to offer —
the only counsel you need to offer — is on how to
invent, how to conduct R&D.

Why Should the Government have an Interest
in Innovation?

We then went into the area of why should the
government be interested in innovation. I won't bore
you with the familiar statistics of how important in-
novation is, that it accounts for half or more of the
growth of our Gross National Product, eighty-five or
ninety percent of the increase in real output.

We decided that we ought to make this point a
little more vividly. We chose three technological in-
dustries — television, jet travel, and digital computers
— that virtually did not exist in 1945, and found that
by 1965 they had contributed more than thirteen
billion dollars to our Gross National Product and
something approaching a million jobs (Chart 2). In
addition, these three innovations obviously affected
our lives in a very important way.

Another thing we did, in order to make vivid the
point of how important technology is in terms of our
economy, was to take five companies in this country
that one could refer to as being technologically inno-
vative companies, and see the thrust of these com-
panies, which were by and large rather small com-
panies or nonexistent in 1945. We can see in Chart
3 that these companies had an annual sales growth
of nearly seventeen percent, whereas during the
same period of time the Gross National Product of
this country grew at a rate of two-and-a-half per-
cent.

Next, we asked, what is the impact of innovation
on international trade? You all have seen the data
on the balance of payments, and of course we in-
cluded that in our study, but we also included some
specific examples to make the point that a gross
number, like what happens to our total balance of
payments, often obscures the fact that the real factor
that underlies this growth has been in high-technol-
ogy products.

For example, in the textile industry we chose cot-
ton, wool and synthetic fabrics. If you study the da-

ta over only a ten-year period from 1956 to 1965,
you will see that cotton and wool exports declined
roughly a third whereas the exports of our high-
technology synthetics went up from a hundred and
fifty-eight million to two hundred and forty-one mil-
lion (Chart 4). Thus, had it not been for the high
technology product, I think it's pretty clear that our
textile exports would have actually decreased. So,
we had a section of our report that dealt with why
innovation is important in practical, meaningful dol-
lar and cents growth terms.

Innovation and Competition

As you've sensed, our country is also enormously
interested in competition as well, and we wanted to
make the point that we didn't think was made as
often as it should, with regard to what technology
has done to competition. This point concerns a com-
parison of the traditional forms of competition ver-
sus what we call the "new" competition, represented
by the high-technology businesses. In the traditional
forms involving largely non-technological businesses,
this is often largely price competition between fairly
similar products. But when you look at the new
competition, the high-technology competition, you
usually see entirely new categories of products that
perform old functions much better or entirely new
functions. Obvious examples in this country: xerog-
raphy, synthetic wash-and-wear fabrics, instant
photography. And these new competitors have — be-
lieve me, because we have "enjoyed" the "stimula-
tion" in one or two of our businesses — enjoyed the
astringent effect of this kind of competition.

There is another aspect of the new competition
versus the old. Traditionally, in the nontechnological
businesses in this country, we've had familiar com-
petitors long-established. There's a tendency to get
to know each other well, a tendency to have discus-
sions, and there have even been a few occasions in
which there has been a kind of collusion, whether
conscious or unconscious.

But when you look at the new competition you
often see competitors who are unfamiliar. They're
called "outsiders" usually. Let's look again at some
of them. We need only to remind ourselves that syn-
thetic fabrics were not invented or developed by the
textile business but rather by the chemical industry.
Or, look at high-speed ground transportation. We
might have expected all of this to come from rail-
roads or automobiles, yet aerospace and electrical
manufacturers have played a major role here.

84

PETER G. PETERSON began his business career in 1948 with Market Facts,
Inc., a Chicago firm specializing in marketing counsel and research on consumer
and industrial goods. He was elected executive vice president in 1952. In 1953 he
joined McCann-Erickson, Inc., advertising agency, as director of marketing serv-
ices. He became a vice president in 1954, general manager of the Chicago office in
1956, and a director in 1957.

He joined Bell & Howell Company in April, 1958. As executive vice president
he headed the company's Photo Products Division as well as Bell & Howell's
corporate market planning and product development programs. He also served as
chairman of the corporate research board.

In April of 1961, at the age of 34, he was elected president of Bell & Howell
Company. His responsibilities were further broadened in July, 1963, when the
board of directors named him chief executive officer of the corporation.

Mr. Peterson is a graduate of Northwestern University and the University of
Chicago Graduate School of Business.

Instant pictures were not developed by the pho-
tographic industry or a company that had been
thought of as being part of the photographic in-
dustry. Xerography was created and developed by a
company that was outside of what we called the
business equipment business.

Some Characteristics of Innovation in America

Now rather than just look at the total gross dol-
lars on R&D, we decided that it would be interesting
and perhaps fun to try and understand the variation
in the expenditures in research and development.
We looked at jour kinds of variations.

First, public or social investment versus private
sector investment. I wish we had the time to discuss
this subject at this meeting, but it's clear that certain
very important problems facing this country are not
getting much R&D investment, and it's also very
clear that the private enterprise mechanism, because
of the great uncertainty and the great risk, is proba-
bly not the right kind of mechanism to get appropri-
ate R&D investment in this area.

But within the industrial complex we noticed
something else when we studied the output of inno-
vation, from one region or city of America to the
other, in one industry versus another, and for small
versus large companies. Let me briefly take you
through some of the findings, and I must say that
this is not highly statistical data but, rather, personal
experience of the panel members.

One of the things that becomes very clear in
America is that you can take eight or ten cities in
this country and look at the data on R&D invest-
ment, on numbers of scientists, on numbers of en-
gineers, and then apply common sense tests on
numbers of new businesses, numbers of tech-
nologically based new enterprises that are being
formed, and you will often find a substantial
difference between one area and the next that does
not seem to have much to do with how much money
is spent on research and development.

In America, for example, there are several areas,
Boston, Palo Alto, Washington, Pittsburgh, in which
you will see the spawning, the nurturing, the con-
ception of many of these important small new busi-
nesses, some of which we might hope would be the
Texas Instruments, Xeroxes, and the Polaroids of
1985.

But in other cities — my own city of Chicago, or
Philadelphia — in spite of substantial R&D invest-

ments we do not see many of these new kinds of
technological businesses being spawned.

We were also impressed with the obvious fact that
there are tremendous differences in R&D invest-
ments by industry in this country, with steel, for ex-
ample, spending about one-tenth of what the drug
business spends in this country — shown in Chart 5.

Now to be sure, part of this is inherent in what
kind of business it is. Quite frankly, gentlemen, we
come to the conclusion that only part of it is due to
what kind of industry it is. When you get behind
some of these numbers and look at some of these
industries, you're led to believe, at least, that the
problem often is that the top managements of some
of these industries have not yet learned to manage
technology, and that in a curious sense this is per-
haps an important reason why they are not spending
as much money on innovation. And this is also the
reason, we suspect, that some of these same indus-
tries are not innovation industries. So, a lot of it has
to do with skill and managing technology and atti-
tudes toward technology, not the inherent economics
of the business itself.

We look at the variation in R&D by size of com-
pany in Chart 6, and the point here is that the small
businesses — those with less than a thousand em-
ployees, which account for a very large percentage
of the companies — account only for a very small
percentage of the R&D done in this country. It is
estimated that some three hundred companies in
America account for something over ninety percent
of the research and development.

We tied this particular finding in with something
else. We looked at several studies that we could find
on innovation in the United States. There has been
one rather classic study, by a group of men who
went back and studied the origin of the most impor-
tant commercial innovations of the twentieth cen-
tury. Now keep in mind that this is in the era, to a
certain extent at least, that we have thought of as
the era of the large company R&D laboratory.

When you look at these inventive contributions —
as shown in Chart 7, you see outstanding examples
of enormously important commercial innovations in
this country — Xerography by inventor Chester Carl-
son, the vacuum tube by an individual, the cyclotron
by an individual, automatic transmissions by a
small-company individual, the Polaroid camera, ob-
viously by a small company individual. The point
being that there is some impressive evidence that the
small inventor, the individual inventor, the small
businessman, contribute to the innovative flow in

86

this country, at least, to a substantially larger extent
than the amount of money he is spending on re-
search and development.

Then we look at five other studies of innovation
in the United States and they make the same point,
that small businesses are responsible for an impor-
tant portion of the significant inventions and
significantly larger percentages than their small in-
vestment in R&D would suggest.

At this point our study then went down two
tracks. I don't want to sound here as though I feel
that large companies are dispensable in this process.
They have a unique and a vital contribution to make.

On the other hand, we did decide that, given this
kind of input on how important small companies
were, if we were really going to study the innovative
process in America we'd better break down the
process into large companies and small companies.

The Innovative Process in the Large Company
Environment

First, let us consider the large company in Ameri-
ca, and the kind of growth problem it faces. In
America we have all sorts of clubs with varying de-
grees of exclusivity. One of the more important
clubs is the Billion Dollar Club. And we've decided
to look at the Billion Dollar Club's growth problem
the way it does (Chart 8). It has annual sales of a
billion dollars. It wants to grow at least ten percent
a year. Some of its old products decline about five
percent a year. There is some price erosion due to
competition and technological competition. If it
wants to grow 10 percent a year, it must make up
the seventy million it loses from price erosion and
industry decay, plus another hundred million or so
from new businesses and new products. So this com-
pany has to find a hundred and seventy million dol-
lars a year of growth if it's to meet its objectives.

Now, what we've done in our report is to try to
categorize the problems that this company has — as
shown in Chart 9. They're really different problems
— not just in degree, but in kind — from the small
company's.

We see here this whole early stage of business
planning very much concerned with words we're
using more and more in this country — venture analy-
sis, directional planning, strategical planning, busi-
ness objectives. In short, where do we want the
business to go?

There are some problems here. Problems like, "It
wasn't invented here." A friend of mine thought that
N.I.H. stood only for the National Institutes of

Health. I told him that in this country a far larger
membership was the membership of the "not invent-
ed here" club. A big company has the problem of
understanding that important inventions in the com-
pany will not come always from the inside, as this
study has demonstrated.

The new idea then goes through a second stage,
the important stage of experimental appraisal. Here
big companies are often missing entrepreneurial
skills. I have talked to the heads of many large com-
panies about this and when I asked them what their
problems were they said quite often, "We are miss-
ing entrepreneurs; we are missing the men who can
create businesses that have never existed before."

Then, very often, innovation within the large
company moves into what we call the embryo stage,
where one sets up small businesses and tries them
out. A very delicate problem the big company has,
as we have discovered at least in this country, is that
if we take these embryo businesses and put them in
existing operating groups or existing divisions they
often get crushed or ignored. One of the problems a
large business faces is how to organize for these new
businesses. The big company has tremendous advan-
tages in terms of skill and resources, production, en-
gineering, money, plant facilities, market research,
et cetera, et cetera. However, when it gets into this
stage, we in this country run into anti-trust difficul-
ties from time to time.

The Innovative Process in the Small Company
Environment

Let us look at the small company — as shown in
Chart 10, because it has a really different problem.
This generally starts out with an idea, and the idea
is usually a technical idea and it's usually an idea by
a rugged individualist who has very little business
experience but who has a total commitment to the
fact that his idea is going to revolutionize the world.

Our economy is filled, incidentally, with examples
of men like this who created businesses where, had
they existed in the large company, their idea would
never have succeeded because our various planning
and analytical techniques might have crushed the vi-
tality of their ideas. And I think we all recognize the
enormous contribution they make.

When I say the words "total commitment," I'm
reminded of a story. In America at least, it's a very
old one — perhaps our foreign visitors haven't heard
it — about the pig and the chicken who were walking
by the restaurant and they see ham and eggs adver-
tised. The chicken suggests they go in, the pig says

87

no, no, no. He says for you it's a donation, but for
me it's a total commitment. As we've interviewed
these small companies, there's no question but
there's total commitment in every sense of the word.

Now the kind of problems they run into when
they seek money are the problems of how they ex-
plain to a hard-headed businessman or a financial
person an idea that is very vague at best, and usual-
ly highly technical. One of the problems, which we
will talk more about later, is that in the financial
community there are very few men who are as com-
fortable with masers and lasers and quasers, and so
forth, as they are with convertible debentures.
Therefore, they have the important problem of
finding people who can understand what they are
talking about.

If they get this initial venture money — and it's
very high risk money because many of these busi-
nesses fail — they then can go into the garage opera-
tion. We are talking here about a small business,
less than five million, usually fifty to a hundred em-
ployees. They do not have a serious marketing prob-
lem because they often know most of their cus-
tomers intimately. Often the government is
supporting this kind of activity. It's usually custom
manufacturing, it's really not high volume manufac-
turing.

But as they move from this stage now into the
second stage where it gets to be a good size business
and where there's more than five hundred people
and where you can no longer know your customers,
except in an impersonal sense, the problem starts
shifting. And many of these small companies who
are dealing with innovation start having serious
problems in this particular stage. Why? They don't
have experience in control technique. They don't
know how to get a product from a custom manufac-
turing stage into a high-volume manufacture, and all
that this requires in terms of processes and
drawings, et cetera.

Financial controls, they haven't had to worry
about before. Marketing, they really haven't had to
worry about. So in this stage a very critical stage is
reached where management, or lack of management,
often becomes the decisive factor as to whether this
business is going to become a Texas Instruments or
whether it's going to remain a small business. If they
can get out into this stage they have other problems.
In this country we, of course, get into all sorts of
questions which we review in our report. These deal
with mergers and "escaping" and making your mon-
ey, as well as anti-trust problems.

Some Findings and Some Proposals for Improv-
ing the Environment

Our panel had many recommendations and I'm
just going to review a few of them. I would like to
say that while we looked at tax incentives in this
country, we could not convince ourselves that major
tax incentives were really the way to foster innova-
tion. The most frequently mentioned proposal of all
is that instead of a fifty percent tax deduction on
research and development we have a seventy-five
percent tax deduction or tax credit, depending on
how you look at it.

To give you an idea of numbers, this would cost
the government, in terms of lost revenue, about a
billion and a half dollars a year. And because over
ninety percent of the research and development in
this country is performed by large companies, most
of this money would go to large companies. As we
looked at the enormous demands for federal reve-
nues, we decided that from a cost-benefit standpoint,
to use a popular word, it was a little difficult for us
to justify this kind of tax loss.

So we had a set of proposals that largely dealt
with the small companies, because we felt the lever-
age per dollar was higher there. For example, if you
equalize the tax treatment of profits and losses of
large and small technically oriented companies, the
life cycle of the small company is such that often
they are losing money for at least five years. If you
happen to be a company like duPont or General
Motors or Union Carbide or Bell & Howell or Xer-
ox or a company of this sort, you obviously take
your innovation losses and write them off imme-
diately. These, i.e., the small technically oriented
companies, companies not only cannot write them
off immediately but because of the five-year-loss
carry-forward, they often lose the carry-forward. So
we had a provision here that did something about
this by suggesting that for these categories of com-
panies the tax loss carry-forward, at the very least,
be extended to ten years.

We had other kinds of provisions. I emphasize to
you that if these companies are going to become big
companies they need to attract management, which
often they don't have. How do they attract manage-
ment that is skilled in high volume marketing and
manufacturing? Obviously, they attract it from the
large companies.

In 1964, in this country, there were major revi-
sions of our stock-option arrangement, as some of
you know (Chart 11). The purchase price of the
stock went from eighty-five percent of market value

up to a hundred. The period of option exercise went
from ten years to five years. The life cycle of these
companies, of course, makes this a difficult but very
important problem, because the stock of these small
companies is normally not nearly as liquid or con-
vertible as is that of the larger company. Also in
1964, the holding time was extended from six
months to three years. We've convinced ourselves,
at least, that if we really want to help these small
companies, we should go back to a more liberal
stock option plan for these categories of companies.

Another specific proposal had to do with capital
gains treatment to professional inventors. We have
laws in this country that say, in effect, unless the
inventor sells all of his patent he will not get capital-
gains treatment for it. But this presents a serious
problem. Many of you in this room are in business
and you know that if an inventor walks in with what
may be a promising idea, there are, at its early
stages many questions, many ambiguities, many un-
certainties about whether the idea is worth pursuing.
From the standpoint of the inventor, if he has to sell
it all in order to get this capital gain treatment, ob-
viously, many of these transactions don't get made;
many of the inventions do not get put into the flow
in the market place.

So we had some suggestions about that. But I
think the real point of our findings had nothing to
do really with specific tax proposals. Our over-all
findings really had to do with the fact that in this
country, at least, we have made great progress in
certain segments of technology; but by and large
there's not sufficient understanding at government,
university, business and banking levels of this funda-
mentally new process.

Many of our recommendations dealt with the
education-attitude-communication side. For exam-
ple, at the Federal Government level, we pointed
out that there's really no federal spokesman — no-
body that's concerned with the generation of new
technological business. For example, we have the
"Small Business Administration." By statute it can't
possibly deal effectively with high-risk capital re-
quirements of these technological firms. As we inter-
viewed people in various departments of the govern-
ment, we did not really find an understanding of the
unique problems that these small technological busi-
nesses had.

As another study of a governmental problem in
our country, we decided it would be interesting to
write down all the government agencies that are re-
sponsible for policies that involve competition

(Chart 12). As the panel studied this, it became
very clear that there were a number of government
regulatory policies that, when one really analyzed
them, were anti-innovative, anti-competitive, in
terms of their effect.

What are some of the reasons for this? Well, one
of the reasons for this, quite bluntly and frankly, is
that many of our regulatory and anti-trust agencies
in this country tend to be staffed by legally oriented
people, not by people who understand economic
forces and, particularly, technological forces. Among
a number of recommendations that we made in this
area one was to seriously look at the possibility of
putting men in our various bureaus and departments
and agencies who have a genuine feel, a genuine
appreciation, of technology and the innovative
thrust in this country.

The Environment for Innovation

In some ways our most important conclusion has
to do with how we get these ideas in small busi-
nesses into the market place. Why is it that Boston,
for example, spawns so many of these businesses?
Let me now tell you of a little study that was made
of Philadelphia versus Boston, in which interviews
were made of companies of this new type that had
been founded there recently. For example, thirteen
company founders were interviewed — seven in Phil-
adelphia and six in Boston.

One of the questions asked was the role that local
universities played in stimulating them to form a
business. Obviously this is not a large sample; but in
Philadelphia, of seven such firms interviewed, seven
said the university played a small role. In Boston
where six were interviewed — and keep in mind that
Boston has many more of this kind of firms than
Philadelphia — all six indicated that the university
played an important role. You know, of course, that
M.I.T. is one of the important universities that plays
a role in Boston.

What about banks? They were asked, "What role
did the local banks have with regard to helping you
to get your business started?" Once again in Phila-
delphia (and, incidentally, I think the figures in Chi-
cago would be very similar to these) seven out of
seven people, i.e., the entrepreneurs, who founded
the business, said the attitude of the banks was poor
or bad. But in Boston, five out of five said it was
good or excellent.

We became so intrigued with this phenomenon
that I took about fifteen of our own executives in
our company to Boston to try to understand this

89

environment that is apparently much more favorable
and stimulating to technological businesses. In the
banking community in Boston you will find at least
two major venture capital firms who specialize in
getting technology businesses started. There are no
such firms in Chicago and many other cities. In Bos-
ton we interviewed leading banks who had set up
departments to deal with the unique problems of
high technology business. You don't normally find
these in other cities.

So what we have tried to do is to define this envi-
ronment that seems to spawn and nurture and create
these businesses. One aspect of the environment that
is terribly important is banks or venture capital
sources, who are at home with technically oriented
businesses, who make it their job to understand
what these fellows are talking about, who have busi-
ness appraisal capabilities to diagnose the risks and
who know whom to call in a certain field if they
have uncertainty about it.

Another is the presence of technically oriented
universities who are genuinely sympathetic and
firmly believe that helping these businesses get start-
ed is an important contribution they have to make. I
suspect that many of our universities feel that it is
not an appropriate role for a university to really en-
gage in an activity that's this closely related to com-
merce. I can only indicate to you that in Boston, at
least, it's a dynamic force that has helped Boston
recover from what could have been a disastrous loss
following the removal of the textile and leather busi-
nesses from the Boston area.

A third aspect of the environment is the entrepre-
neur and we said in our report that entrepreneurship
breeds entrepreneurship. Put yourself in this situa-
tion. You're a young man who has an idea, you're
committed to it and you're trying to find out
whether to start a business with this idea. I submit
to you that if there are a few multi-millionaires in
the community that have been successful in doing
this, you're not going to be discouraged by that fact.
And it's important to have these successful men.

In the environment we see people whom we call
marriage brokers, who know how to find people for
these small companies. How to get them manage-
ment. How to help them get money at the right time
if that's what they need. And, very important, com-
munication. In the Boston area for example — this is
also true of a few other areas — it is clear that there's
a lot of talk back and forth between universities,
banks, marriage brokers, small companies et cetera.
We don't find this in many other communities in the
country.

What have we concluded about innovation in
terms of the government's role? Perhaps its most im-
portant role is to assume the leadership in getting
this environment set up in the business community
and in the local communities where bankers, busi-
nessmen, universities, technologists, et cetera, are
working together to get these businesses formed.
One of our important recommendations is to have a
top conference in Washington, and then set up re-
gional conferences in every major city of the United
States, to get this innovation mechanism going.

Some Thoughts About the Future Environment
for Innovation

What does this mean to businessmen? In the first
place, we've had the model in this country that there
are big companies and little companies, and the big
companies get at the technology of the little com-
panies by swallowing them up or acquiring them.
I'm not so sure that's the only model, and I would
guess — from my study of these small companies —
we're going to see some new creative relationships
emerge over the next five to ten years — creative re-
lationships which will maintain the enthusiasm and
independence of these small companies and yet add
to them the skills and resources of the large com-
panies.

I suspect our anti-trust people will have to do
some serious rethinking about the conglomerate en-
terprise concept that they have found offensive. It
could be argued that combinations of these small
companies might be one of the best things that
could happen to this country if we're seriously con-
cerned with innovation and getting it started.

What I've really been talking about is a revolu-
tion that has been taking place in the world since
the time primitive man first invented that wheel. I
have a little story here that I hope makes a point. It
is set in the primitive era, and features the sales
manager of several hundred thousand years ago.

The sales manager says, "Oonka" — he's talking to
his market researcher — "We've been getting com-
plaints about our heavy goods transporter."

Oonka, who is the market research man, as usual,
is very well prepared and has his statistics in fine
order. He says, "I can tell you exactly why. 48.3%
think that the runners are too bumpy and lumpy and
39.2% say that the tow-rope keeps breaking."

"Well, that's simple enough," says the sales man-
ager. "We're going to put research and development
to work and what they're going to do is to develop
smoother runners and stronger tow ropes."

The market researcher reflects awhile and he

90

says, "Gee, that's all well and good, but what if, for
instance, R&D came up with something spectacular,
like a wheel?"

The sales manager looks incredulous and says,
"What's a wheel?"

Oonka says, "I don't know, the word just came to
me."

This apocryphal story is designed to make a
point. In some circles in this country, at least, we
have believed too seriously some of the literature
about the marketing concept, in which, translated
literally, somebody goes out and finds out what peo-
ple want and the research people are instructed to
carry out certain assignments. The real need these
days is to have businessmen and men of affairs who
are what I call bilingual; who speak the language of
the market place on the one hand and the laborato-
ry on the other.

A study was done recently of the six hundred sen-
ior officers of America's largest corporations: nearly
forty percent had technical degrees. A study of the
pool of executives from which the next generation's
senior executives are going to come, men between
thirty-five and forty-five, over half have technical
degrees. One of the adjustments we must make in
American management, and I suspect all over the
world, is to get managers who have this bilingual
quality. Because if we're illiterate as far as technolo-
gy is concerned, we're going to be functional illiter-
ates of a rather serious kind. I say this with real
feeling. Incidentally, Dr. Hollomon was quite kind
in not telling you that I spent about a year-and-a-
half at M.I.T. One of the reasons it wasn't longer
was that I have the unique distinction of having
made the lowest mechanical perception score in the
history of the school.

So, 1 say this with deep feeling, the need is for
men who can understand what is going on in the
laboratory. In one of the businesses that we are in-
volved in, photography, we see an example of this
type of person — that person is Dr. Edwin Land of
Polaroid. This is a man who combines imaginatively
what is technically possible with what is commer-
cially feasible. He works at the frontier of science
and yet he has a feeling of what people want. One
of his great successes recently is a little camera
called "The Swinger," and he's the kind of man who
can say, "What we now need is a $19.95 Polaroid
camera with a name that swings." We can't build a
concept around a man like Dr. Land, but this kind
of bilingual communication, if you will, has to take
place.

Many of you, I know, are technical people, and
one way of putting it is that we need an impedance
match between the laboratory and market place, be-
cause too many of the signals, frankly, are getting
lost and I think that if you talk to many, many sen-
ior executives in America, they're not concerned so
much with the amount they're spending on research
and development as they are with its productivity
and what they're getting out of it. And they're con-
cerned with the lack of an impedance match, the
loss of signals.

It is my feeling that the creation of these new
businesses that we've been talking about is not only
essential to the problem of growth in a technological
society, but it's one of the most torturous, exciting,
difficult jobs that American industry faces and we
just can't settle for having less than the best men
devote themselves to what I've been talking about.

Many of us, I'm afraid, get to be prisoners of our
environment. Marshall McLuhan was here yester-
day. You know he talks about how we don't see the
environment we're in. The comment he made that I
think best captures this notion is, "I don't know who
discovered water but I'm sure it wasn't a fish." The
point, of course, being that we can't have men that
are isolated from the rest of the world.

We often talk about the ivory tower and it has
occurred to me that many of us in business and in
government can become so isolated in our occupa-
tion and in our own technologies that we live in an
ivory tower that is far more remote than the ivory
tower of the academic person. And part of the shift
that we're going to need if we're really going to
make use of this R&D is to have businessmen, if I
can use the phrase, who cross-pollinate. Business-
men who cross-pollinate with the non-suburban
community, the academic community, the young
community but, increasingly, the scientific communi-
ty. And here I suspect, gentlemen, time is our en-
emy. Most of us — at least my day is like this —
spend so much of our working day on monumental
trivialities which bear only the dimmest relationship
to what we're really paid to do, that by the time we
extricate ourselves and get down to the business at
hand, we're commonly too tired to cross-pollinate
with anyone.

I will end where I began. We are on a tightrope
in this technological age, and we are walking on the
tightrope across the exciting technological Niagara.
The real question before the house is, "Can we stay
on top and know where we're going?" We must. We
can, and I think we will!

256-707 0-67— 7

91

CHART 1

-&

TYPICAL DISTRIBUTION OF COSTS IN SUCCESSFUL
PRODUCT INNOVATIONS

Research —

Advanced Development -

Basic Invention

Engineering and
Designing The Product

Tooling —

Manufacturing Engineering

(Getting Ready for Manufacture)

Manufacturing
Start-up Expenses

Marketing
Start-up Expenses

Percent

5-10%

10-20%

5-15%

10-25%

40-60%

10

20 30

40

50 60 70 80

CHART 2

ECONOMIC EFFECTS OF ONLY THREE
TECHNOLOGICAL INDUSTRIES OUT OF MANY

In 1945, the TELEVISION, JET TRAVEL, and DIGITAL COMPUTER
industries were commercially non-existent.

In 1965, these industries contributed more than $ 13 BILLION
to our GNP and an estimated 900,000 jobs . . . and
very important, affected the QUALITY of our lives.

92

CHART 3

A FEW EXAMPLES OF TECHNOLOGICALLY INNOVATIVE

COMPANIES THAT HAVE EXPERIENCED MUCH OF THEIR

GROWTH IN THE LAST 20 YEARS (1945-1965)

AVG. % ANNUAL GROWTH (Compounded)

Net Sales

Jobs

Polaroid

m '"• M 1 1 ■ : 1 ' .

13.4%

7.5%

3M

14.9%

7.8%

IBM

17.5%

12.1%

Xerox

(Haloid Co.)

22.5%

17.8%

Texas Instruments

(1947-1965)

28.9%

10.0%

Average % annual sales growth of above companies*: 16.8%
Average % annual growth of GNP: 2.5%

'Excluding Texas Instruments for which data are available only for the past 18 years.

CHART 4

INNOVATION AND INTERNATIONAL TRADE

An Example: U.S. Exports of Yarns & Fabrics
Synthetics (High Technology)
Cotton & Wool (Low Technology)

EXPORTS 1956

$187 Million

$158 Million

Source: U.S. Department of Commerce.

COTTON -WOOL

SYNTHETICS

EXPORTS 1965

$125 Million

$241 Million

93

CHART 5

VARIATIONS IN COMPANY- FINANCED R&D
AS A PER CENT OF NET SALES, BY INDUSTRY

■

Steel

(Primary ferrous products)

Transportation Equipment

(Excluding aircraft)

Chemical

Drugs

Source: NSF (1966) — Figures are for 1964.

Net Sales
(Billions)

R&D
(Billions)

R&D
Net Sales

17.8

0.111

0.6%

34.3

0.865

2.5%

25.6

0.830

3.2%

5.03

0.224

4.5%

CHART 6

VARIATIONS IN R & D, BY SIZE OF COMPANY

Percent Distribution of R & D
Performing Companies

Percent Distribution of R & D
Expenditures

100

80

60

40

20

5,000 of More Employees ^

100

^ 1,000 to 4,999 Employees
ess Than 1,000 Employees

Source: Basic research, applied research, and development in industry, 1962,
NSF 65-18, 1965.

94

CHART 7

SOME IMPORTANT INVENTIVE CONTRIBUTIONS OF

INDEPENDENT INVENTORS

AND SMALL ORGANIZATIONS IN THE TWENTIETH CENTURY

Xerography

Chester Carlson

DDT

J. R. Geigy & Co.

Insulin

Frederick Banting

Vacuum Tube

Lee De Forest

Rockets

Robert Goddard

Streptomycin

Selman Waksman

Penicillin

Alexander Fleming

Titanium

W. J. Kroll

Shell Molding

Johannes Croning

Cyclotron

Ernest 0. Lawrence

Cotton Picker

John & Mack Rust

Shrink-proof Knitted Wear

Richard Walton

Dacron Polyester Fiber "Terylene"

J. R. Whinfield/J. T. Dickson

Catalytic Cracking of Petroleum

Eugene Houdry

Zipper

Whitcomb Judson/ Gideon Sundback

Automatic Transmissions

H. F. Hobbs

Gyrocompass

A. Kaempfe/E. A. Sperry/S. G. Brown

Jet Engine

Frank Whittle/ Hans Von Ohain

Frequency Modulation Radio

Edwin Armstrong

Self-Winding Wristwatch

John Harwood

Continuous Hot-Strip Rolling of Steel

John B. Tytus

Helicopter

Juan De La Cierva/Heinrich Focke/
Igor Sikorsky

Mercury Dry Cell

Samuel Ruben

Power Steering

Francis Davis

Kodachrome

L. Mannes & L. Godowsky Jr.

Air Conditioning

Willis Carrier

Polaroid Camera

Edwin Land

Heterodyne Radio

Reginald Fessenden

Ball-Point Pen

Ladislao & Georg Biro

Cellophane

Jacques Brandenberger

Tungsten Carbide

Karl Schroeter

Bakelite

Leo Baekeland

Oxygen Steelmaking Process

C. V. Schwarz/J. Miles/
R. Durrer

CHART 8

GROWTH PROBLEM IN A SUCCESSFUL LARGE COMPANY

(Hypothetical Case)

Annual Sales

Sales Decline (Oldest Products).
Price Erosion

Typical Market Penetration.
Growth Target

_ $1,000,000, 000

_ 5% Per Year

_2% Per Year

_25%

_10% Per Year

$70,000,000

$100,000,000
$170,000,000

Such a company needs $170,000,000 of new sales from a combination of

(a) established products

(b) new products in established businesses

(c) new businesses

Ultimately this company must seek to enter completely
new businesses or abandon its growth objective

95

CHART 9

CHART 10

MANAGING TECHNOLOGICAL INNOVATION

LARGE COMPANY ENVIRONMENT

MANAGING TECHNOLOGICAL INNOVATION

SMALL COMPANY ENVIRONMENT

CHARACTERISTICS

PROBLEMS

CHARACTERISTICS

PROBLEMS

Venture analysis

Directional planning

Business objectives

control

BUSINESS
PLANNING

Complex enterprise

Has R/D organization

May lack certain

technical skills

EXPERIMENTAL
APPRAISAL

Outside inputs needed

Incentives available

Continuing R&D effort

EMBRYO
BUSINESS

Growth

Jobs

Products

SUCCESSFUL

GROWTH

BUSINESS

Not invented here

Time value of money

Inbreeding

Lack of specific market

experience often kills

good projects

IDEA

Individualists

Technical

Uncertainty

No business experience

Total commitment

MONEY

High risk requires

high potential return

Relatively small $

No technical experience

Know-it-alls
Risk vs. Cost
emphasized
Extend present
businesses

Failure to meet return on

investment criteria in

early years

Antitrust

Key management

"GARAGE"
OPERATIONS

Losing money
Less than

• 100 employees

■ $1 million capital

■ 5 years old
Technology oriented

High ratio technical men
Government contracts

Fast reaction time
One or few customers
Custom manufacture

High return on investment
High value added

2nd STAGE
BUSINESS

Assimilation
Antitrust

New kind of financing
Dilution of equity

Many impersonal customers

Product oriented
High volume manufacture
More than

• 100 employees

• $1 million capital

• 5 years old

SUCCESSFUL

GROWTH

BUSINESS

Growth

Jobs
Products

Capital?

In business?

Appraisal a

Lack of understanding 5

• Banks §

• Industry <

• Government </>

• Universities £

Key management

Incentives

Fringe benefits

Government procurement

Total commitment

Key functional staff

Control techniques

Market analysis

World wide marketing

Costs

Competition

Escape
Merger
Sell out
Antitrust
Timing

96

_.

chart 11 w^^^m^m^mm^mm^mM^ma^^mmmmmmm^mma^

SOME OF THE MAJOR 1964 REVISIONS OF STOCK OPTION
PLANS ENTITLED TO CAPITAL GAINS TREATMENT

Before 1964

After 1964

Minimum Purchase
Price of Stock

85%

of

Market Value

100%

of

Market Value

Maximum Time

to Exercise

Option

10 Years

5 Years

Minimum Holding

Time Between Purchase

and Disposition of

Stock

6 Months

3 Years

CHART 12

Board of Governors of
the Federal Reserve
Dept. olericulture System Federa| ^.^

Dept. of Interior \ \ \ /Commission

Dept. of Justice

Dept. of Treasury

Atomic Energy
Commis:

Civil

Aeronaut!
Board

Comptroller
of the Currency

Federal Communications
Commission

Federal Deposit Insurance Corp

^COMPETITION

' Federal!
Trade
Commission

United States
Tariff Commission

Small Business
Administration

Securities and
- -Exchange
Commission

Interstate

Commerce

Commission

eneral Services
Administration

Food and Drug
Administration

Federal

Power Commission

97

Dr. Hollomon: I'd like to introduce next, Professor
James Brian Quinn of Dartmouth College for a dis-
cussion on these presentations. He has written much
about the processes of research and development,
their use and their management.

Professor Quinn: After the excellent statements by
the Vice President last night, Dr. Hornig, and my
two colleagues this morning, what should one add? I
shall only touch on a few issues which I consider
most important and highlight significant points al-
ready made.

There are some basic philosophical points which
need emphasis in any discussion of government poli-
cy for technology.

The Nature of Technology

The most important of these is the nature of tech-
nology itself. Technology is knowledge . . . knowl-
edge about physical relationships systematically ap-
plied to useful purposes. Its manifestation, hardware
— which many consider technology — may or may
not be technology. A crude lathe in the hands of a
skilled man can represent a sophisticated tech-
nological system. But the most advanced computer
in the hands of a savage jungle tribe is likely to
simply be a rapidly rusting hunk of junk.

Thus when we talk of policies for technological
development, we must think in terms of policies
for essentially intellectual processes. This is some-
thing of a new concept for national policy makers
and for all managers. The concept should include
policies to stimulate both:

( 1 ) The creation of knowledge for practical pur-
poses, and

(2) The use and transfer of knowledge for prac-
tical purposes.

Within this context national policies for technolo-
gy should include guidelines for the development,
use, and dissemination of "management tech-
nologies" which — like operating research techniques
— deal with optimal relationships between physical
entities. Yet such technologies have rarely been dis-
cussed as a significant component of national tech-

nological policies. I believe this is a serious over-
sight.

To date, the European focus — and often that of
the lesser developed countries — has been largely on
how to create new technologies, preferably those
based on frontier discoveries in the physical
sciences. Mr. Major wisely did not limit his focus to
this point. He recognized that the far larger question
for Europe, the United States, and most of the world
is how to intelligently use and transfer technological
knowledge we already are capable of creating. In
fact, for most of the underdeveloped and even de-
veloping countries, the foremost question should be
how to create and adapt those relatively low-level
technologies which could most easily relieve their
people from needless unproductive routines and
vastly multiply their real wealth, health, and capital
formation potentialities.

With these philosophical views in mind, let us
look at some of the more significant questions of
government policy as they affect technological devel-
opment. While I shall use the United States govern-
ment apparatus as a focal point for my comments,
the same general questions would exist for many na-
tions.

The Public Interest vs. Economic Growth

At the heart of our discussion should be the ques-
tion: How can the Government stimulate the crea-
tion, use, and transfer of technological knowledge in
the "public interest," not just toward economic
growth in the usual sense of an ever higher Gross
National Product? Clean air, purified water, or
higher levels of health may very well not mean as
much economic growth as the use of similar re-
sources in other ways. But such uses may be
infinitely more important to the society than the im-
plied loss in "economic growth." When we avoid the
simplistic use of "economic growth" as the sole cri-
terion for advance, this leads us to some most com-
plex questions. What is the public interest? Who
defines it? Should we consider a single cohesive
"science policy" to support these goals, even if they
can be defined? Or, should we really think only in
terms of policies (plural) for science and technolo-

gy?

Personally, I think, both. I feel that pluralism in
approach offers great strengths for a technological
society. The vying of individual minds and ap-
proaches — both within the government and in the
private sector — to establish social goals and to solve
society's problems, is among the greatest of all stim-
uli to the creation and use of technology.

98

JAMES BRIAN QUINN [ s Professor at the Amos Tuck School of Business Ad-
ministration at Dartmouth College, and a consultant in Long-Range Planning and
Research Management to major United States and foreign companies. Formerly
Assistant Dean at the Tuck School and Assistant Professor at the University of
Connecticut, Professor Quinn has been a consultant to the U.S. Department of
Defense and the U.S. Treasury Department. He was a staff Consultant on Science
Policy to the Select Committee on Scientific Research (Elliott Committee).

Professor Quinn received a Bachelor of Science Degree in Engineering from
Yale University, followed by a Master- of Business Administration in Management
from Harvard University. His Ph.D. in Economics was conferred by Columbia
University.

Professor Quinn's writing have been extensive, with emphasis on the planning,
budgeting and control of research, and the transfer of the results of research to
operations at both corporate and national levels.

But even pluralism can go too far. Some choices
must be made by any responsible government in the
interests of social efficiency and effectiveness. Gov-
ernment must avoid excess duplication of expensive
programs. It must avoid undue conflicts in the pur-
poses of related programs. It should avoid overem-
phasis on one technology at the expense of others
which may be more important to the achievement of
total social goals. It must choose where to invest
when private investment mechanisms are inadequate
for social purposes. Typically, as the primary sup-
porter of a nation's R&D activities — and as pur-
chaser of a large portion of a nation's Gross Nation-
al Product — the government is a prime determinant
of the balance toward which the society will direct
its technological resources. Through its allocation
mechanisms it establishes to a large extent which
technologies will receive major emphasis, which will
be stimulated to a lesser degree, which will be left to
thrive under individual initiative and support, and
which "big science" areas may be purposely ignored.
For no single nation — not even the United States —
can solve all the technological problems of mankind
at once.

This hard fact leaves the U.S. — and all other ad-
vanced nations — with many difficult choices in poli-
cy. How much should the government spend in total
on the development amd dissemination of tech-
nological knowledge as opposed to the private sec-
tor? How far can the government's decision making
structure allow redundancy or competition? In what
areas is it most important to set forth strict rules for
action or general guidelines for choices? How can
one hope to predict the ultimate impact of any given
policy as its effects diffuse through the society? How
can we even measure its effect after the fact in a
complex social system?

Levels of Technology

Whether systematically or intuitively, govern-
ments must inevitably formulate policies for tech-
nological development. Whether they are formulated
with a full sense of the complexity of a technological
culture is another matter. Too often government
policy for technology could better be called "policies
for science and the advanced technologies." The
effective "level of technology" in a society depends
not just on its capacity to participate in certain ad-
vanced scientific areas — or even to "reduce-to-prac-
tice" first. Quite to the contrary, its true level of
technology will depend to a much greater extent
upon its ability to use relatively low degree tech-

nological knowledge in the routine production, dis-
tribution, and service industries, which are necessary
to back up more advanced technological fields and
which typically provide the bulk of its Gross Nation-
al Product.*

The effects of many simple technologies, when
multiplied through a whole society, may be
significantly larger than the impact of a few more
advanced technological capacities. For example, the
prevalence of basic "work simplification" and
"efficiency" concepts and attitudes everywhere in the
United States may well be more important to its in-
ternational competitive posture than even its most
glamorous modern technologies. Thus, technological
policy must consider not just the interests of science
and the advanced technical areas, but the balance of
technological knowledge which the whole society
needs.

How can government policy stimulate the contin-
uous development of both high and low level tech-
nological knowledge on a broad base in the society?
More important for many countries, what policies
can help induce good people to go into the less
glamorous fields of technology — like highways, ur-
ban development, building trades, and so forth —
where the ultimate payoff to the society may be
much higher than investing the same skilled re-
sources in advanced fields like nuclear power or
computer technologies? These are problems which
plague all the advanced western countries I have
contacted in my international studies.

The Policy Formulation Process

How does a government exercise its role in na-
tional policy making for technological development?
Here we should recognize clearly an often over-
looked aspect of the policy-making process itself.
National policy is rarely created finally by a "Ser-
mon on the Mount" by a policy making executive.
Even the excellent statements of the Vice President
last night will not become policy until the apparatus
of government acts on them in a consistent fashion.
Government policy — as industry policy — derives
from a complex interaction of many forces. These
include, certainly, the statements of general guidance
provided by top government officials. But they also
include the recommendations and ego-involvements
of people proposing programs and approaches at
lower levels in government agencies. The project se-

* As a case in point; Communistic China has advanced nuclear and
missile weapons capacities, but the limited availability of consider-
ably lower levels of technology in her agriculture, transportation,
distribution, and construction fields apparently constrains her per
capita wealth to minimal levels.

100

lection and priority setting systems of each agency in
essence formulate policy, as do the actions of inter-
bureau budgetary and coordination groups (like the
Bureau of the Budget or Office of Science and Tech-
nology in the United States) at the highest adminis-
trative levels of government. In many countries, the
fiscal and political decisions of their legislatures are
as important in policy formulation as the highly so-
phisticated analytical and organizational apparatus
of their Administrative or Executive cadres. In fact,
in the United States the Congress — through its fiscal
controls and oversight activities — is perhaps the ulti-
mate source of policy in many areas affecting
science and technology. Yet its fragmented commit-
tee organization and review procedures practically
insure non-cohesive policies in the government sec-
tor and an uncoordinated impact of government ac-
tivities on the private sector. The complexity of the
decision making apparatus in free countries thus
militates against formulation of a truly integrated
policy.

But even if all of these forces did interact to for-
mulate a cohesive policy, there would still be the
question of getting the government's far flung ap-
paratus to follow that policy.

For example: in the early stages of World War II,
the central British Government bureaucracy may not
have wished to emphasize radar research, but techni-
cal teams in the Government and the scientific com-
munity generally saw to it that the official policy was
not followed. There are many other examples of
similar failures in implementation. Some of these
failures are healthy, some not.

Thus, as we talk of government policy formula-
tion, we must think of the entire complex planning,
evaluation, and control structure of the government
and how it could conceive of and implement desired
policies. It is ultimately this structure which allows
decentralization in government, maintains pluralism
in the government sector, and through its interac-
tions determines the government's share of the
"public interest" — yet does not imply omniscience
or direction by any single group or individual.

Mechanisms to Exert Policy

In addition policies for the creation and utiliza-
tion of technology in a non-totalitarian society result
from an even broader-scale interaction among gov-
ernment activities and other social forces outside the
direct pale of government. The primary role of gov-
ernment is to balance the impact of these forces,
stimulating some and suppressing others in the pub-
lic interest. It exerts its role as a balancer in a varie-

ty of ways, and policy questions are associated with
each of the mechanisms through which the govern-
ment typically directs its influence.

This morning Dr. Hornig touched upon several of
the most important ways in which the government
extends its role as a policy formulator into the pri-
vate sphere. He mentioned the government's role as
a buyer of technology. This role raises many impor-
tant questions. How can the government insure a
favorably balanced impact on the society from its
many decentralized buying functions? How can con-
sistent and beneficial priorities be set within mission-
oriented departments, between mission-oriented de-
partments, and for new social needs not presently or
exclusively within the defined missions of existing
government departments? How can government de-
velop its functions as purchaser of items desired by
the public — yet too complex or costly to be bought
by individuals or localities — without infringing un-
duly upon the personal freedoms of its citizens?

Other questions exist concerning the government's
role as an investor in technological knowledge. How
can the government balance its commitments for fu-
ture needs against current necessities? How can its
complex political and policy apparatus evaluate the
relative worth of investments in general education,
science, social sciences, or the humanities against
added technological development? No accepted cri-
teria even exist for weighing such alternatives.
Neither are there adequate data nor analytical tech-
niques for evaluating such questions. Until such cri-
teria, data, and techniques do exist there can be no
realistic alternative to pluralistic competition for re-
sources.

Still other questions result from the government's
regulatory role. For example, how can government
adequately estimate the impact of its economic,
fiscal, and social policies on the development and
utilization of technology in the national interest?
How could the U.S. government have weighed the
impact on its technological communities of its recent
decisions on interest rates and the rescinding of
depreciation credits against the other economic and
social goals these policies sought? What role should
government take in establishing physical standards
for products and processes to obtain desirable con-
sistency among local, regional, state, and private
users? How can the government analyze and predict
the impact of its rules, procedures, and practices —
under contracts and in heavily regulated private sec-
tors — on the technological capacities of those sec-
tors? How can it obtain productive comparability

101

among regulations in competing or impinging sectors
without imposing bureaucratic rigidities which inhib-
it or prevent flexibility and change?

Thus, the central question of government tech-
nological policy is: How can a government achieve
cohesiveness in the effects of its various policies on
the total society without destroying the freedom and
pluralism upon which the dynamism of that society
often depends? But these are just the questions
which exist at the government level in national poli-
cy formulation.

The Private Sector and National Policy
Formulation

In a free society the government does not deter-
mine national policy alone. The decisions of private
concerns and individuals are as important, if not
more important, than government decisions in deter-
mining the overall posture of the nation. Thus, ma-
jor questions exist concerning the relationship in a
free society between public vs. private choice and
development and utilization of technology by the
public vs. private sector.

What role should the government play in the
creation of new technology? Should it limit its sup-
port to education and the support of basic science?
Should it support development programs for items
to be sold in the private sector? Should it create
cooperative laboratories for lagging sectors? To
what extent should the government participate in the
actual production of technological goods and serv-
ices in the United States? What policies can be for-
mulated to differentiate the roles of the public and
private sectors? If there is to be a "new partnership"
between industry, education, and government — as
many have suggested — what should be the terms of
this partnership? These are basic policy questions,
and I submit that we have neither good data nor
good theory on which to base conclusions. Conse-
quently, perhaps our only approach can be experi-
mental.

Further policy questions strongly affecting the pri-
vate sector are these. What policies should govern-
ment develop concerning the size of competing units
within its borders? How can the economy benefit
most from the production and marketing economies
of scale offered by large size and the flexibility and
freedom offered by smaller units? I feel that a
country needs both giant and small companies for
its continued healthy development. The question is
how to develop policies which encourage rational
development of both — and discriminate seriously
against neither one form nor the other.

Another most significant policy question for the
private (business) sector is this. How can private
producers be stimulated to further develop markets
where group consumption is essential? How can tra-
ditional business attitudes toward group consump-
tion markets be changed? Can the benefits of private
production be maintained when group consumption
becomes essential? Since the problems of all socie-
ties indicate that group consumption for health, edu-
cation, de-pollution, transportation, urban develop-
ment, and so forth will be increasingly essential if
man is to improve the quality of his life, how can
private and government attitudes towards these mar-
kets be changed to develop the most effective rela-
tionship between private production and public con-
sumption? A most important development (in the
U.S. and many western European countries) over
recent years has been the constructive participation
by businessmen in government policy formulating
commissions, such as: our recent National Commis-
sion on Technology, Automation, and Economic
Progress; the Royal Commissions of Sweden; and
the various planning committees in France. In all
these countries there appears to be a changing atti-
tude among businessmen toward "group consump-
tion" as something apart from the dreaded "social-
ism" it was identified as in the past.

Labor's Role in National Policy

Another private institution — organized labor — al-
so largely determines any free nation's technological
posture. Labor can encourage or virtually stop tech-
nological change in specific sectors. To assist eco-
nomic growth through technological advance, gov-
ernment policy must help develop flexibility of
movement, job adaptability, and acceptance of tech-
nological change in the labor sector. The problem is
how to accomplish this without infringing upon the
freedom of laborers to choose their own futures and
to work in favorable industrial relations environ-
ments.

There can be no question that technological de-
velopment in the U.S. and Sweden (for example)
has been vastly stimulated by these nations' high-
wage levels and demand for excellent working con-
ditions. How can such demands continue to be con-
sidered acceptable points for collective bargaining
while the restriction of new technologies is severely
limited? How can employment and unemployment
practices be restructured to obtain a higher utiliza-
tion and motivation of the employable work force?
Along with others, I am deeply concerned that the

102

administration of U.S. unemployment and welfare
programs is often wasteful and can tend to impact
unemployment, create unfortunate work attitudes,
and increase social inertias — rather than relieving
the problems they seek to solve. Yet the producing
sector must shoulder the added burden of unneces-
sary social overheads. What new forms of data and
incentives are needed to keep able people actively
and flexibly producing for the society while the truly
handicapped receive the care they need? Again
neither an adequate theory nor reliable data exist
upon which to base firm conclusions.

National Policy and International Affairs

A final set of policy questions exists particularly
for the United States in relationship to international
affairs. As the dominant technological power of the
Western World, the United States runs a risk of be-
coming emotionally and politically cut off from the
allies it needs throughout the world. Consequently,
there is still another series of policy questions which
our government must (almost uniquely) consider in
relation to its international posture.

To what extent should the United States encour-
age or actually discourage the "brain drain" from
foreign nations? Our policies to date have generally
encouraged movements of key people from friendly
nations to the United States. But there is some ques-
tion as to whether these people could not contribute
more to long term United States' and world interests
by being stimulated to stay in their native countries.
Certainly the United States cannot isolate those per-
sons who wish to come to its shores to share the
excitement of working with the most advanced
thinkers in their fields and to use advanced equip-
ment only available here. But to what extent should
U.S. national policy encourage the sharing, exporta-
tion, or use of technology abroad rather than
domestically? What kinds of technological transfers
are most effective to underdeveloped, developing,
and relatively mature economies? If these differ, can
the nation have one set of policies for one group of
nations and another for others?

Despite many statements that technology is a
"world resource" just like scientific knowledge, there
is a real question whether sharing technology freely
would actually stimulate or retard world tech-
nological development. Unlike scientific knowledge,
which is generally sought for its own sake, technolo-
gy is developed for its practical worth in specific
applications. To distribute this value freely is to de-
prive risk takers of some of the presumed benefits of
their efforts. To what extent should a government

force individuals who have developed technological
knowledge through their private resources — or a
public which has invested heavily to obtain such
knowledge — to share benefits with others who have
been unwilling or unable to make similar expendi-
tures? The fundamental question is whether all so-
cieties would tend to lose the important intellectual
output of many private (or privately supported) in-
ventors, if they were forced to share their tech-
nological knowledge freely throughout the world?

Finally, there is an entirely new private force in
world technological affairs, the giant international
technologically-based companies. Many of these
now have greater technological and production ca-
pacities than nations long considered sovereign in
world affairs. There are major questions as to how
the policies of parent and host countries should be
adapted to maximize the world-wide effectiveness of
these companies. To what extent can these com-
panies be considered apolitical forces in the world
affairs? To what extent are they to be regarded as
logical extensions of their parent and/or host coun-
tries' national technological policies? What kinds of
policies are desirable at the parent country level? At
the host country level? At the special treaty level?
International law level? How can all interested
forces work together to obtain maximum interna-
tional benefit from these new sophisticated entities
which can contribute so much to or distort the cul-
tures they operate within?

Conclusion

These are national policy questions which affect
the development and use of U.S. and free world
technologies. They are the dominant issues of our
times and must be faced in the best way we can
while we develop better data and techniques to im-
prove our decision processes. But a key step in mov-
ing forward would be to recognize the complexity of
the issues we face, the need for a thoroughly articu-
lated science and technological policy apparatus
throughout all elements of government, the critical
relationships of the private business and labor sec-
tors, and the new issues raised for all societies by
the developing needs for group consumption and in-
ternational exchange of technologies on a scale
never before conceived. To solve these problems
will require ( 1 ) new mechanisms of communication
and cooperation among the three major sectors of
labor, business, and government in each country,
and (2) new concepts of how economic systems ac-
tually operate and the role of technology in world
affairs.

103

Dr. Hollomon: Thank you Professor Quinn. I would
like now to introduce to you Professor V. K. R. V.
Rao, member of the Planning Commission of the
Government of India, a person who has participated
in United Nations affairs, and an economist who is
deeply interested and responsible for finding ways of
applying technology in an emerging economy.

Professor Rao: Mr. Chairman, I must begin by
saying how very much I have enjoyed the edu-
cated discussions that I have heard both yesterday
and today. I must also confess how deeply I have
been impressed by the articulation of people who
do not belong to the academic world. I find, for
example, that the analysis presented by Mr. Peter-
son, who spoke a little bit earlier, is much more
articulate than even that of the academic or the
political world. I will take back with me these
impressions, as an index of the skills that ase
fostered by the economic system in this country.
Just two or three points I wanted to make. I
am expected to express views on policies of gov-
ernment toward the creation and use of technology.
My country, India, provides a star example of how
almost everything which has been suggested here
in the course of the statements of these two days,
can be tried.

Prominent Place of Science in Government of
India

For example, I can recall that immediately after
the country became independent, the Government
of India, under the stimulus of Mr. Nehru, issued
a special government policy resolution on science.
The policy resolution indicated the importance of
science and technology in economic development,
gave the scientist a very important place in Indian
society, created a scientific policy committee in the
Cabinet, and so forth.

Then, definite steps were taken to foster scientific
research in the public sector through the creation of
laboratories of various kinds and of research sta-

tions in government departments. Our government's
expenditures for research, I think, went up from 47
million in 1947 to something like 706 million rupees
today, and we are still increasing our expenditures
on scientific research. In our country, of course,
these expenditures, unfortunately, are almost totally
in and by the government; there is not any remotely
comparable expenditure by private industry in my
country.

Support for Education of Scientists and
Engineers

Another thing is the question of adequate quantity
and quality of scientific personnel. There again I
think we started with about 90,000 persons entered
in science courses. Today, the figure is 440,000
persons who are engaged in science courses in my
country. By the time we come to 1970 and 1971
we will be under our Fourth Plan and we hope to
reach a target of about 800,000 persons enrolled
in science courses. It is not a very large number,
because by that time the number of university stu-
dents in my country will be between 2 and AVa
million persons.

There is a great need for persons trained in engi-
neering courses. We began with a national capacity
of about 6000 engineering graduates per year. The
number is now 50,000 and is expected to go up even
more.

Developing Private Enterprise

Then, we, too, have a national resource in the
private corporations that are trying to make salable
and marketable inventions based on the findings in
these scientific laboratories. We have something like
40 national science laboratories — some are basic
research laboratories, and some are commodity
laboratories. All my countrymen may not agree
with me, but I think the latter kind is especially
productive as far as development of commercial
innovations are concerned.

Financial Encouragement

Because we have such a need to promote new
enterprises, we have special depreciation allowances,
we have development banks and special loan sources
for making available funds to the private sector. As
far as foreign capital is concerned, we welcome
foreign capital. I think I can say with a sense of
pride, mine is the one country where any foreigner
is treated so that he may feel completely at home.

104

V. K. R. V. RAO is a Member of the Planning Commission of the Government of
India, with responsibilities for Agriculture, Education, International Trade, Social
and Economic Research and Program Evaluation. In this position, he holds the
rank of Minister. He is also Professor of Economics at the University of New
Delhi, a post which he has occupied for twenty years. Professor Rao in addition
serves the University as Vice Chancellor.

Professor Rao founded the School of Economics at the University as well as the
Institute for Economic Growth. He has also been active in the U.N. as Chairman of
its Subcommittee on Economic Development from 1947 through 1950, and as a
member of the U.N. Committee of Experts for Definition and Measurement of
Standards of Living.

Professor Rao is a graduate of both the Universities of Bombay and Cambridge.

I don't think there is a single recorded example, in
the last twenty years, of acts of hostility toward any
foreign enterprise within my country. There is no
discrimination and all tax incentives and fiscal in-
centives are available to foreign enterprises as well
as our own. In spite of our being a democratic
socialist country, we have no foreign investment
controls. We are relaxed in our procedures; we are
trying to stimulate growth by creating a favorable
climate for foreign enterprises to come in.

How Have All the Policies Worked Out?

With all this attention, support and these re-
sources, we have not succeeded in accelerating our
economic development significantly. We have had
some economic growth, and undoubtedly we are
infinitely better off than we were twelve years ago.
Nevertheless, we are nowhere near where we would
like to be, nor has there been anything like a sig-
nificant reduction of the gap between us and other
major countries of the world. And, there are a lot
of countries who have not been able to achieve this
either. The failure is not trivial when it occurs in
my country, India, numbering five hundred million
people, and occupying a key position in the Asian
continent quite apart from being an old and not
entirely an uncivilized nation.

Now, what can we do? And this is a question
which, if I may say so, we should discuss at length
in a seminar such as this, but dealing specifically
with the developing countries.

In trying to use technology and science for eco-
nomic growth, I think it is important for us to
realize that this cannot be treated as a matter of
individual national policy. It cannot be handled only
by each national government to meet its own prob-
lems, especially for those governments which find
themselves occupying what is called a dominant
world position. In some ways such governments are
creating more problems for the developing coun-
tries, simply by the speed with which they are
advancing their technologies relatively to the rest of
the world.

NOTE: The remainder of Professor Rao's text is
paraphrased from his remarks, which, unfortunately ,
were not recorded in toto.

I am not suggesting that they should stop advanc-
ing their technology, but every advance made in the
developed countries does make it more difficult for
the developing countries to catch up or reduce the
gap that exists between them. I would like to take
just a couple of minutes to propose some means for

creating the conditions under which the developing
countries can make use of technology for their own
economic growth and for modifying their basic
structure so that they may take their place among
the growing and dynamic nations of the world.

We recognize that this will require a highly imagi-
native, as well as organized effort. A country like
mine which represents a significant portion of the
world's population approaches this era with the
problem of surplus labor. Nearly 70% of our work-
ing population is engaged in manual or agricultural
occupations. One cannot continue to have 70% of
the population so occupied for an indefinite period
if you want to establish the basis for economic growth
and an opportunity to use technology to our national
advantage.

Then' we also suffer from a scarcity of capital.
With the limited number of industrial operations,
our capability to generate capital from earnings is
severely limited. These two conditions reinforce one
another to create serious barriers.

One of the fundamental requirements for utiliza-
tion of science and technology in the underdeveloped
countries is for the population to have functional
literacy. Here again it is only a very small propor-
tion of our population that is now able to read and
write, which again limits the opportunities for eco-
nomic growth and the contribution of science and
technology.

What Remedies are Available:

There are some proposals I would like to offer for
consideration with this audience. These suggestions
may not all be able to be taken up concurrently, but
I hope that, together, we can make some progress
through applying ourselves to meeting the problems
described earlier.

First, I would propose that we use the most
up-to-date training methods to rapidly expand the
proportion of our population that has functional
literacy. Is it not conceivable that a massive pro-
gram conducted during a period of six months to a
year could increase significantly the proportion of
our population which can use written instructional
material? The increased capability of these trained
people would begin to make our large population
useful in the modern economic development process.

Second, I would propose the establishment of
an international agency that would be concerned
with the technological health of the developing
countries. We already have analogies in the field of
public health. We now need institutions that could

106

provide the necessary technological constituents of
a functioning economy. Such an agency would, on
the basis of its experience throughout the world,
be able to bring about conditions, throughout the
developing world, that parallel conditions found
satisfactory elsewhere.

Third, we need to find new means to make
private foreign capital available to support the
growth of export industries in the developing coun-
tries. Unless these countries can develop significant
exports, it will be increasingly difficult for them to
have the capital to purchase imports. It is, therefore,
to everyone's interest that such export industries be
built up and it may be wise to consider some pro-
posals for sharing the export earnings between the
countries furnishing the capital and the countries
receiving it. In this way, the opportunities that
exist for the developed countries in marketing to the
underdeveloped world will have within them the
seeds to make the developing world an active partner
in future trade.

Fourth, The success of the U.S. Peace Corps
in the field of cultural and social development pro-

vides a model that may be useful in the economic
development area. Would it not be possible to estab-
lish a "Peace Corps" which might contribute effort
and talent for the scientific and technological devel-
opment of the developing countries. If our countries
can develop independent positions in science and
technology through such an injection of the wisdom
and experience gained elsewhere, our countries will
be able to make a more constructive contribution to
world economic development.

Our over-all objectives should be, through the
combined hard work of developing and developed
countries, to create the conditions so that our large
populations can become more significant producers
and consumers of the world's goods and services. I
trust that there will be additional consideration of
the special problems of the developing world in
symposia such as these. I would also encourage ex-
perimentation with some of these proposals in rela-
tion to the Indian economy which offers such an out-
standing opportunity to demonstrate the feasibility
of international cooperation in economic develop-
ment.

QUESTIONS FROM THE FLOOR

Dr. Hollomon: As is usual with almost all affairs of
men, schedules are difficult to keep; on the other
hand, we have delayed lunch a little bit so we could
have some more discussion between the audience
and the panel. Do we now have questions, com-
ments, suggestions, or controversy from the floor?

into our successful economy, namely the profit-
oriented R&D, and the entrepreneurship? If they
don't really understand that, then would not the
adaptation of just one element, a large amount of
government R&D money, give them a distorted tech-
nology that might accentuate the gap?

Question: I have a question, primarily addressed to
our foreign guests, either Dr. Major or Professor
Rao. We have heard a brilliant exposition by Mr.
Peterson on some of the components of our tech-
nological environment. One is the tremendous influx
of government money for contract research, and so
on. Second is the large amount of private research
and development wherein private companies support
people in doing R&D and then to translate and con-
vert it for commercial purposes. Third, we have the
pluralism that Dr. Quinn mentioned, which is a
many-sided way of encouraging entrepreneurs and
enterprises to get started.

My question really is this : There has been a lot of
pressure, because of the so-called technology gap
with Europe, to emulate our government's R&D
sponsorship. Do European countries really under-
stand the other two components that have gone

Dr. Hollomon: I think Mr. Major might want to
react to that.

Mr. Major: The question is very rightly put and I
think it is quite true that in Europe they do not
understand this completely. Perhaps I could add
now what I had in my manuscript on the tech-
nological gap that gives an answer in a way. It has
been suggested that there be closer research cooper-
ation in certain fields between U.S. and Europe as a
way to remedy the gap. That is the Italian sugges-
tion. Such a cooperation may be a good thing, but I
doubt whether it would have the expected effect.

To my mind there is a gap, but I'm not certain
that the reason the gap is there is to be found in the
technological field. I believe that the fundamental
reason for the gap is more a question of mentality
and attitude. On this side of the Atlantic you are

256-707 0-67— 8

107

more dynamic, you see more in the future. In Eu-
rope we are, on the whole, more complacent. I think
you have very often heard about the dollar incen-
tive. Have you ever heard about a pound incentive?
A franc incentive? Or a mark incentive? I never
heard of it. Your attitudes have helped to establish
the management skills, the big market, free of cus-
toms, and the big industrial units. In such a system
it is obviously appropriate to make use of science
and technology as important tools for the growth of
the whole system.

Science and technology are and have been present
in Europe for many years. What we'd like is the
attitude necessary for the creation of more big in-
dustries with leaders who know how to make use of
science and technology. We also need politicians, or
rather statesmen, who can create the bigger markets
which are needed for our companies to grow. I men-
tion this because I think it is important for govern-
ments to consider the gap in full perspective.

Dr. Casimir: First of all, I am very strongly opposed
to speaking about "the" technology gap — using the
definite article. I think that is entirely wrong. I
don't even like to speak about a technology gap or
technology gaps.

What we have is a distribution of technological
knowledge. In some cases the United States is
ahead, and sometimes even far ahead, of Europe; in
other cases they are slightly ahead. In a few cases
Europe is ahead. Not even all of American technol-
ogy is on one level — it shows a widespread dis-
tribution from the very advanced technology to
primitive operations. To speak about all these dis-
tributions as being part of "the technology gap" is to
create an artificial notion. It is getting into newspa-
pers and it is getting into political discussions. I
would like to abolish the words "technology gap"
altogether, or if that can not be done, at least to
abolish speaking about "the technology gap," be-
cause it does not exist as such.

Now, it is certainly true that there are symptoms
that are alarming. They show that in the distribution
of abilities there is considerable advantage to the
United States in certain fields. Europeans don't wel-
come this trend. The question is whether people in
Europe realize that this certainly is not due only to
U.S. Government spending for R&D.

As you know, I have recently been around this
country and interviewed people with a small OECD
group. They will write a report on science policy
practices in the United States. In our study, we tried

to get more information on the influence of the gov-
ernment spending on research and development.

It is perhaps too early to formulate the conclu-
sion, but still the general impression is that, al-
though there is a positive influence there, it is much
more indirect than many people in Europe believe.
It is not so much the specific pieces of hardware and
specific procedures that are turning out to be useful
in the economic sphere, it is more a generally high-
level of technology and a general managerial compe-
tence. It was already suggested here to us that if you
want to speak about a gap, it is more of a manageri-
al gap and an organization gap than actually a tech-
nology gap. As a matter of fact, if we bring people
together in Europe in the right way, aimed at the
right purpose, we can do quite well technologically,
in many important cases.

Take the CERN organization at Geneva, dealing
with high energy physics; it certainly can at this mo-
ment compete in results with high energy physics
work anywhere in the world. The technology of the
bubble chambers and their accelerator is quite as
good as what you find here. It was all made in Eu-
rope by a combination of European firms. If the
aims are clearly stated and the organization is well
made, I don't think that technology is the difficult
part.

Certainly there are fields where one has to rely on
American help. One has to go to the United States
for the big computers one needs. I don't consider
that so very tragic. But there is one thing that one
must never forget, and that is, that even when we
train new managers and new entrepreneurs, the
United States will remain a tough competitor.

What I should like to propose is this. If America
really wants to do something about the "gap," start
introducing a different currency in each of the fifty
states, and impose other serious boundaries among
all the states. You have enough Italians, Greeks
and Germans and Dutch people to create four, five
or six official languages in the various regions. If
you made a state with an official Italian language,
be sure to incorporate minorities with another
language or two. Otherwise it won't work or create
the full effect. It would also help to have several
of these states drive on the right side of the road
and others keep to the left. It would be a nice
project in operational research to work this out
in such a way that you would get the maximum
number of collisions. If this experiment were done
and we then, ten or fifteen years from now, com-

108

pared your America with Europe we may well have
bridged the gap, whatever it is!

Dr. Hollomon: Are there comments from the floor?
Yes.

Mr. Rodney W. Meyer, of Hughes International
Corporation: I would like to comment please. If
there's a more technological group in the world than
our company, I'd like to know where it is. We
spent about 30% of the year, each year for ten
years, in Europe and I'm going to take advantage of
Mr. Peterson's characterization. I'm one of those
fellows that divides people into two groups. Euro-
peans divide themselves in two different classes. One,
those that apologize and, two, those that work. Now
let me be specific. In Mr. Major's country, Tandberg,
as far as I know, makes the best hi-fi tape recorder
in the world. I, among other people, have gone to
the man who invented it trying to persuade him to
use better components, and he says, "I'm not going
to change a thing, it's the best there is." And he's
right. I think the Norwegians are doing a great job.
I know this, I never heard a Norwegian apologize
for being a small country.

Phillips Radio has something like eighty percent
of the sonars designed to find fish, used in fishing
fleets of the world. Their competitors are Raytheon,
Siemens Electric and RCA. So there's no problem in
being small, if you want to get to work.

Dr. Hollomon: We will let you reply to that Mr.
Major.

Mr. Major: I don't think it needs any reply. It is
quite true that we have some few people that are
exceptional. I think that you will find that every-
where. But what we are talking about here is more
of a general situation in Europe.

Dr. Hollomon: One might make a general point that
in this country, too, small companies, starting new
technical enterprises, don't have large markets ini-
tially. They are not even competing for a large mar-
ket. They start with small markets and then grow
those markets. That is true here as well as anywhere
else in the world.

Are there other comments from the floor?

Mr. Zvegintzov: I am from the National Research
and Development Corporation, United Kingdom, a
government-supported effort to encourage the devel-
opment of government-devised technology in the

private sector. I was extremely glad to hear what
Professor Quinn and Mr. Peterson said. It looks as
though your problems of this country are almost the
exact same as those we are identifying in Britain
today.

I heartily agree with Professor Casimir also that
there isn't the technological gap; it is primarily the
organizational environment, the management, the
dissemination of knowledge through the training of
executives that accept and adopt what already ex-
ists.

We have based our organization on the principle
that the best place to apply government R&D results
is in and through industry. The job of research and
development is to make money, not to give people
fun; that's a by-product. What we do is to invest just
enough money into our industrial partners to make
them give our R&D developments sufficient priority
to convert them into commercial innovations. We
are providers of revolving funds of risk capital. In
the event of success we get the capital back through
royalties on the exploitation and commercialization.
In the event of failure, we have lost our money. We
can't say yet what the time cycle for full recovery is;
it may be twenty years; it may be twenty-five; I
can't say. But the effect is one of adding the catalyst
to the business enterprise; the acumen which exists
in industry sometimes requires a bit of an extra
boost when new technology is involved.

Dr. Paolo Rogers, Olivetti Co., Italy: Mr. Chair-
man, from what has been said in this discussion it
will appear that this symposium is about to conclude
that there is no technological gap. If this is to be the
consensus, I would like to register a dissenting vote.
The gap may not be purely technological but there
is definitely a gap, with a capital "G" — Europe and
America are growing in different scales in different
directions, and this is creating a very dangerous gap
indeed within the Atlantic world. It may be due to
poor organization, to inadequate dissemination of
information, to lacks in management, to limited
R&D, and to insufficient applications or use of fun-
damental research.

The semantics aside, Mr. Chairman, I think this
meeting must recognize that a dangerous gap is de-
veloping and that we need to find ways — for both
sides — to deal with it.

Professor Quinn: I would just like to make a brief
comment on that. I think that the gap that you refer

109

to is genuine in certain areas. To me, one of the
very important aspects that has not been emphasized
in the discussions so far is the matter of the large
initial demand and opportunity for relatively low-
level technological skills. I go into many European
bakeries, drug stores, groceries, et cetera, and see
that simple time and motion concepts would release
people into the society for much greater additions to
production. This is also true in the underdeveloped
nations where relatively simple technologies would
release large numbers of people to do more produc-
tive things. I hope that this will be recognized in our
conclusion here. The gap has many dimensions; it is
not solely one involving complex technologies.

Dr. Hollomon: I would like to make one comment
myself; I don't think anyone here is saying that
there are not differences. Dr. Casimir has said, too,
that it is neither simple, nor a single difference.
There are many complex differences. Comparable
differences exist right within the United States. We
have those who are in the space and military efforts,
which are at the forefront of technology, because the
problem there is not one of cost but of performance.
It is a difference which exists between the highly
sophisticated scientific and technical business that
depends almost solely on technology and the rest of
the business world.

I don't think the world is moving apart. There are
new and highly sophisticated technical businesses
which the world has never seen before and we hap-
pen to have a lot of it here. The same techniques
that apply to these highly sophisticated businesses
do not necessarily apply, as Mr. Quinn has said, to
the economy of the less developed country. We must
learn and appreciate that there are different sciences
and technologies that apply to that situation. That's
the difference to which you refer.

I'll take the prerogative of having the microphone
and comment on Prof. Rao's arguments. I agree that
the difference in technology between the less devel-
oped countries, and the European, American, Rus-
sian economies is a much more substantial problem
than any small disparities between us and Europe,
or even between Mississippi and New York State —
the latter, by the way, is a large disparity, too.

That difference is much more one in management
skills and entrepreneurship than the differences that
have been stated to exist between us and Europeans
even though those are significant too.

One of the great mistakes is that, as Prof. Rao
mentioned himself, India has tried all the techniques
that we suggested. It may be that those techniques
only work for a highly developed country. They may
not work at all for the kind of country that he is
talking about. Entirely different means may be ap-
propriate; we need to find them.

Let's look at our own case, that of the United
States. When we began to grow seventy-five to a
hundred years ago, there wasn't much R&D. We
didn't have scientific advantages; we didn't have a
national policy on educating scientists and engineers.
We didn't have a national research and development
corporation. We didn't have government contracts
to industry. None of the things which these gentle-
men have suggested were available during the great
take-off period of this country, which changed it
from an agricultural economy to a manufacturing
economy. We used entirely different techniques dur-
ing that period of our development. Perhaps you
don't teach to all those young people in India the
same kinds of sciences we now teach. As the Vice
President said last night — the "ics", nucleonics and
physics and what have you, may not be the best
approach. It wasn't what we used, for whatever
that's worth.

We made, in this country — the greatest political
experiment that any country ever made — by estab-
lishing the land-grant colleges, the state universities
that taught the farmers and diffused the growing
body of knowledge in agricultural technology. That
was done by a national program, and it was done by
a pluralistic decentralized institution, primarily by
man-to-man conversation and education.

All I'm suggesting is that for a country like India
or Vietnam to believe that the methods which work
today for the United States or Britain or Norway
would work there is, in my opinion, a grave mistake.
The application of the most modern sciences may
not at all be appropriate. We don't really know the
soundest approach.

110

Luncheon Program

Introduction:

Mr. Alexander B. Trowbridge

Assistant Secretary of Commerce for Domestic and
International Business

Mr. Trowbridge: The site for this conference, these
magnificent facilities of the National Bureau of
Standards, are clearly the products of a highly ad-
vanced economic structure. This new industrial rev-
olution today is based upon the burgeoning technol-
ogy, and the developed nations of the world lend
new impetus to that revolution with each day of new
inquiry and innovation.

From all that has been said so far in this sympo-
sium, including Mr. Rao's remarks just before
luncheon, it is abundantly clear that we must focus
on the position of the developing nations of the
world who are not yet fully engaged in the develop-
ment and utilization of technological progress.

Mr. Reynolds raised this issue yesterday when he
said we would probably be judged 50 years from
now more closely on how we have dealt across the
Equator, rather than across the Atlantic. And the
Vice President eloquently spotlighted this area of
concern last night in his challenging talk at the ban-
quet.

What has been done — and what more should we
be doing — to make technology available to nations
at all levels of economic development?

Secretary Connor said yesterday that our efforts
should be aimed at removing barriers and obstacles,
and I can only re-emphasize that this is indeed the

policy of the United States Government. We support
and encourage the transfer of our technology to the
developing countries. The achievements of Ameri-
can research, the products of our free enterprise sys-
tem, are available under the patent process through-
out the world. We have active programs in
promoting U.S. private investments, licensing agree-
ments and joint business ventures with all the peace-
ful developing countries of the world.

And these programs are bringing with them the
best of our technology and know-how. The coming
year will be very important for the less developed
countries, for it is then that the long-planned inter-
national symposium on industrial development is
scheduled to take place — probably toward the end
of 1967. We hope that this symposium will do much
to focus the attention of the developing countries on
what practical steps they can take to realize their
industrial development potential. We, in the United
States, will give our full support and encouragement
to that symposium, to which our next speaker has
already given great leadership.

It is a great honor and privilege for me to be able
to introduce to you the United Nations Commis-
sioner for Industrial Development, Dr. Ibrahim Hel-
mi Abdel - Rahman.

Ill

ALEXANDER B. TROWBRIDGE is Assistant Secretary of Commerce for
Domestic and International Business. Prior to assuming this post in early 1 965, he
was President and Division Manager of the Esso Standard Oil Company of Puerto
Rico. He was formerly engaged in the overseas operations of several petroleum
companies in Cuba, El Salvador, Panama and the Philippines.

A native of New Jersey, Mr. Trowbridge is a cum laude graduate of Princeton
University (1951 ) where he majored in the Wood row Wilson School of Public and
International Affairs.

Mr. Trowbridge has written of his overseas business experiences as a contributor
to Harlan Cleveland's "The Overseas Americans" and was a consultant in the
preparation of "Spearheads of Democracy — -Labor in the Developing Countries,"
by George C. Lodge.

Speaker:

Address:

Dr. Ibrahim Helmi Abdel-Rahman
Commissioner for Industrial Development,
United Nations, New York, New York

Technology and the Developing Countries

Dr. Abdel-Rahman: In my early days, I didn't hear
much about "science and technology." We used to
hear about science only. Everybody spoke about
science. I think this combination, science and tech-
nology, is relatively recent in literature. Even at
UNESCO, which was established 20 years ago, they
included science with a capital "S"; and even this
was introduced with some difficulty in those days.
Now nobody mentions technology without science,
or science without technology, and it seems that
they are very much related.

Another word combination so often heard is "Re-
search and Development." I think this is an inven-
tion of the American corporation. Of course, it may
not be a monopoly. R&D is now a recognized com-
bined function: you don't speak about research
without development, or development without re-
search.

Then, "transfer of technology." Transfer of tech-
nology has been mentioned, I think, about 3000
times in the last day or two, but how do you
transfer technology? In books? By moving people?
By what? What is technology itself?

The Process of Transferring Technology

The "transfer of technology" reminds me very
much of a blood transfusion. You know that for a
healthy body you must have blood. In certain situa-
tions the blood is not there, so you choose some
good blood and inject it by transfusion. Blood by
itself has little value; however, blood within the
body is of paramount importance. Along the same
vein, it seems to me that even a whole room full of
technology put in books or on "microfilm" won't do
anything. I want technology to be inside the body. I
want it to be inside a production process. I don't
believe in technology by itself.

Technology is generated within a system, and
similarly is transferred and transplanted within a
system. You cannot speak about technology sepa-
rate from the system in which it works. People study
blood, blood diseases, and blood circulation, but
they don't study them for their own sake. Blood is
thought of as a constituent of a system.

What I mean by this anology is: In the advanced
countries you have a system which operates the
processes of production, of consumption, of creation
of needs; you have research and development, and
within this system technology moves; there is a cy-
cle; there is a living body.

Technology in the Economic Cycle

When you go to the developing countries, you
don't find this cycle. I think this is more or less what
Professor Rao has been saying this morning. In his
country, and my country, we do not have such a
cycle, which goes this way: first you have production
of goods, and services; then you have the purchasing
power to buy this production; you have the incen-
tive to increase production; finally, you have the
technical capacity, the ingenuity for creating new
techniques and procedures — that is where technol-
ogy goes into the circuit.

You can have institutes studying blood and insti-
tutes studying technology, but these by themselves
do not complete the cycle.

Here at the National Bureau of Standards — and
I'm so glad at last to be visiting this place — here
you do not concern yoursleves directly with eco-
nomics, you don't think about national consumption
directly. You work on certain aspects of technology
and development, but there are existing connections
carrying whatever is going on here into the main-
stream.

In the developing country this is not so. There is
no cycle. They get industry from outside, they get
technology from outside, they get science from out-
side — but inside the country, there is not enough
circulation.

The mechanism of the body there is not working
properly. This means that we need to activate this
cycle of life in the developing countries and to inject
into this cycle the life-blood which is technology, in
a way that will produce a growing economy. To me,
this is more important than speaking about the
"gap" and the "levels."

Can we put dynamics inside societies so that they
grow and generate their own energy and exercise a
variety of functions? Can we get modern technology,
advanced technology, to be a help in that?

113

IBRAHIM HELMI ABDEL-RAHMAN is Commissioner for Industrial Develop-
ment jor the United Nations, an office he has held since appointment by Secretary-
General U Thant in 1963* Following twelve years as a member of the faculty of
Cairo University, Dr. Abdel-Ruhman became the first Director of the Egyptian
Atomic Energy Commission, occupying this position from 1954 to 1959. Concur-
rently, he was Secretary-General of the Council of Ministers and the National
Science Council, and was Under Secretary and head of the technical staff of the
National Planning Commission of the United Arab Republic. He also headed the
U.A.R. delegation to the International Atomic Energy Agency in Vienna and was
a member of the UN Conference on the Peaceful Uses of Atomic Energy.

Dr. Abdel-Rahman, a native of Sharkia, United Arab Republic (1919), re-
ceived his Bachelor of Science Degree from Cairo University, followed by post-
graduate work leading to a Ph.D. degree from Edinburgh University. He also
accomplished post-doctoral work at Cambridge University and later at Leyden.

*On December 6, 1966, Dr. Rahman was appointed the first Executive Director
of the United Nations Industrial Development Organisation (UNIDO) by the UN
General Assembly. The functions of the Center for Industrial Development have
now been transferred to UNIDO.

There are economic levels, there are social levels,
there are philosophical levels. If you like, there are
"technological" levels. This differentiation by levels,
as we have been told this morning, exists even in the
United States — between industry and industry, and
between state and state. Can one conceive of a so-
ciety where all levels in all directions are equal? I
think it would be a very dull place, by the way!

How Can Technology Help Start the Economic
Cycle of Life?

What is needed is to recognize that in the under-
developed countries, the poor countries, the cycle of
life is not really working. We have to see how can
you transfuse the technology which is already avail-
able — not as something in itself, but in order to
create this moving cycle.

Technology used in production, whether agricul-
tural production or industrial production, is the
technology most necessary in the developing coun-
tries. Yet the developing countries, without having
this technology, can utilize outside technology. In
my little village in Egypt, the farmer boys have tran-
sistor radios. We have television, motor cars, jet
planes; we are asking for and obtaining levels of life
which are drawn from outside. Needs are created by
this. But we do not have the corresponding industry
that will produce these requirements at home or
produce the wealth with which to buy these needs.
This disrupts the balance between technology of
production and — for the lack of a better word — I
call it "modernization." In the underdeveloped
countries, we aspire and do modernize our life by
utilization of the cinema, radio, television, and
health activities. But we are not so capable of in-
creasing our industrialization.

All the while, through the integrated system I re-
ferred to earlier, these two functions (industri-
alization and modernization) are moving in parallel
paths in the advanced countries. You are producing
color television, you invented color television, you
are the consumer of color television. You have pro-
duction, utilization of technology, consumption,
moving parallel to each other. So, economically,
this is a viable system.

We in the underdeveloped countries are exposed
to the results of technology, but there is a lag be-
tween industrialization and modernization. What
should we do to correct that?

Three Possible Strategies for the Developing
Nations

A very easy reaction would be to shut oneself off
completely from the outside and stop this moderni-

zation. You could continue living in the underde-
veloped countries in the life of the Middle Ages. So
the readiest solution is the solution of isolation.

A second solution — just as an alternative — is to
create a selective barrier that will allow the technol-
ogy of production to pass through but keep out the
technology of consumption. We could stress heavy
industrialization, we could stress modernization ol
agricultural production, but not have shoes or shoe-
makers, not have houses, not have television, until
we build industry first. We could subject our politi-
cal system to this requirement, forcing the whole en-
ergy of the society into trying to make production
and consumption come closer to each other to
create a balance. This is a second alternative.

A third alternative is to see that you get from the
outside not only the television and other modern in-
novations but also some support to be able to pay
for television, and innovation. Today, we get sup-
port for industrialization. But Dr. Rao doesn't want
support. He is too proud. He wants our countries —
and I agree with him — to be capable of producing
things by themselves. We want to share in the hu-
man development. We don't just want to be handed
down things. I think Professor Rao will agree with
me, that for a certain stage, outside help is needed,
both economic and technological, provided that this
outside help is going to lead to increased vigor, and
fuller life and development of the developing coun-
tries. It doesn't matter if it takes long, provided we
can really get working.

The Disillusionment with Foreign Aid

This brings me to some of the disillusionment
which we are experiencing about foreign aid.
Twenty years ago, as a result of the Second World
War, we in the underdeveloped countries passed in-
to a stage of political maturity — a stage of de-col-
onization, a stage of emergence of new nations —
though some are very old peoples. We recognize
that political independence, though necessary, is not
sufficient. We also need economic availability and
social change. The same principles were recognized
fully by the advanced countries, including this
country. This country created Lend-Lease during
the war — a concept of sharing responsibility for vic-
tory — and this country developed, also, foreign aid
as a concept for joint responsibility in peace.

After 20 years, there is disillusionment. In my
opinion, this disillusionment comes from the fact
that we underestimated the task and overestimated
our tools and facilities for tackling it. We assumed

115

that a certain amount of aid was going to generate
miracles, and that provided one does this trick or
that, developing societies could change immediately.
What we are discovering on both sides — the ad-
vanced countries, and the underdeveloped countries
— is disenchantment and disillusionment because the
results are not up to the level of expectation. The
difficulty is in the original expectation, not in the
actual result. The original expectation was too high,
and not based on real experience. Now we have 20
years of experience and we should reexamine this
situation. If this were done, we would find that what
is needed is a better method of enabling the devel-
oping countries to come and share in world activity
for everyone's mutual benefit.

I would like to comment also on the several
points which Dr. Rao mentioned this morning. I am
on the best terms with Dr. Rao. We know each
other, we admire each other, but I have some com-
ments nevertheless.

He speaks about an international technology
agency. Translated into my language, he wants a
world blood-bank. I don't want that. I don't think
you can store technology and then press a button,
and technology will flow. What we need is some-
thing different; namely that when you come to a
country to establish an industry, available knowl-
edge and experience that will create the physical
productive entity must be examined first. In other
words, I want technology to be embodied in an
operation and a system; I don't want blood in test-
tubes, I want blood inside living people. I am happy
to see that Dr. Rao agrees with me.

In a second point, Dr. Rao wants almost a super-
sonic system of education. Within six months or a
year he would like to educate people to be techni-
cally and functionally literate. I leave it to more ca-
pable people than myself to see if this can be done.
I believe it should be done as part of a specific ac-
tivity rather than just teaching technical literacy for
itself. If you have a factory — and this has happened
in many places : — and you take people who have
never had any technological experience, and you
give them training on the spot in a specific field,
they acquire the necessary training to fit into the
activity. We have seen this in the army technical
services, we have seen this done in other fields. The
question is not the transition from the unskilled
worker to the skilled worker when you have provid-
ed the organization that will supply him with real
work. I don't object to Dr. Rao's appeal for rapid
literacy if it can be done, but the essential point

here is to believe that given proper productive facili-
ties, the human interest and the basic capabilities, it
is not difficult to build up the trained personnel re-
quired. Training and industrialization move to-
gether.

On a third point — about export promotion
through joint enterprise — let us wait until the after-
noon session to hear more about it. Let us see, if the
experts think it is feasible to establish modern in-
dustrial production facilities on an appreciable scale
in the developing countries — with the participation
not only of foreign capital, but also of management,
and export marketing — so as to utilize the labor and
the raw materials of the developing countries in an
increasing production based partially on the market
demands in the advanced countries. This is a very
serious question before us and it ties in with the last
of the alternatives I proposed before. If we do not
want the underdeveloped countries to shut them-
selves off from the world, and if we don't want them
to move in the direction of heavy industrialization
exclusively at any cost, the policy to follow is to
give them a chance to develop their resources jointly
with the developed countries in an activating proc-
ess.

The Corporation as a Catalyst in the Develop-
ment Process

This brings me to an observation about the role
of the corporation. I am not referring to the private
corporation, or the public corporation, but the cor-
poration as an institution. In the last 20 years or 30
years the corporation, as an institution, has faced
two very difficult battles successfully.

The corporation has succeeded in the battle of
labor. You now have the corporation working fairly
well with labor. That was not the situation in 1900
or even in 1930. In those days, whenever you spoke
about social legislation for the improvement of the
lot of labor, it was taken to be against the corpora-
tion. But in the meantime, we found it is possible to
have successful corporations with stronger labor
participation and higher standards of living for la-
bor. That is a very important achievement; it is the
first of the two battles that the corporation as an
institution won — namely succeeding in making
peace, and collaborating with labor.

The other battle, which I think the corporation
also won, is the one with the public authority. In this
country and other countries we wanted to find out
whether the corporation could live in a society in
which central public authority has to exercise cer-
tain functions. Less than a decade ago this was sup-

116

posed to pose a conflict. With the corporation hav-
ing interest on one side, and public authority having
interest on the other, it was said that the two would
have to fight each other, but we have found out in-
stead that the corporation as an institution could
live and cooperate with public authority, and peace
between the two could be obtained.

A third and new battle is coming up for the cor-
poration. The corporation must recognize its inter-
national role and responsibilities. This is where the
question of export and joint enterprises comes. If
you have a corporation in America, even if it is 100
percent private, it must be recognized that, inherent-
ly, while this corporation my be working in a
specific industry, it has also an international respon-
sibility. It does not just have responsibility toward
the shareholder, which no one would deny, but it
has a certain responsibility toward the public of the
country in which it is domiciled. In addition, there
is also an international responsibility. This interna-
tional role and responsibility of the corporation is, I
think, what we are trying to discover, and which
may hopefully be very useful in solving some of the
questions which Dr. Rao has put this morning,
namely, to establish effective machinery for the
transfer of technology.

What Future for the Developing World?

1 don't want to be an alarmist. On the contrary, I
am an optimist, but I feel that — from my limited
experience in the United Nations and in my own
country and in the fields of science and administra-
tion in which I have worked — the developing coun-
tries within the current system of relations don't
seem to have much of a future. This is very serious.
This will become more and more apparent. The bal-
ance of payments, the difficulties of foreign ex-
change, the political instability, all of these are
symptoms which are appearing in one form or the
other. They are symptoms of the underlying fact
that the present set of relations are not capable of
being endured by the developing countries for long.
There must be some basic change in thinking if we
want to bring the developing countries — which
represent two-thirds of the human population — into
an active participation in the affairs of the world
and to guarantee them some hope for the future.

As things are, I cannot give the developing coun-
tries any picture of optimism for the future. After
20 years of effort, after all the aid they have taken,
after all the good wishes and the resolutions they
have received from the UN — where are they now?

On what basis could you tell them that they have a
future?

In line with the title of this luncheon's discussion,
in my opinion, this calls for a very intensive exami-
nation of how to get technology, which is abundant
here, to work in these countries — the technology of
getting wealth, the technology of getting the progress
which has been achieved here, to be realized there.

The Need for Better Ways to Industrialize

The technology is available. But how is it to be
built into the systems of the developing countries? If
we cannot do that, and do it quickly and with effec-
tiveness, I don't see how the picture can change;
instead I can imagine a lot of deterioration.

How can it be done? I think this is a matter for
examination. We in the UN have hardly started
defining the problems. Referring back to the inter-
national symposium that the UN Center for Indus-
trial Development will sponsor within a year, we
find that there has never even been an international
meeting on industrialization before — never. Nobody
thought of it. People have spoken of specific indus-
tries or certain aspects of industrialization of the de-
veloping countries; but to make it the total subject
matter of an international meeting is new.

We hope this coming symposium will be useful.
We hope it will be useful in the sense of discovering
the dimensions of the problem. We hope it will
speak straight to the developing countries, because
they, too, have made mistakes. There are bad ad-
ministrations; there is bribery; there is laxity in the
determination of policy. There is confusion of politi-
cal factors and economic factors. There may also be
prejudice against foreign participation, which may
or may not be justified. There have been mistakes,
and there are shortcomings.

From the side of the advanced countries, one also
has to admit, with due respect, Mr. Secretary, that
the advanced countries will have to learn also. They
should be shown — with all good intentions — that
they have given aid for 20 years which has not suc-
ceeded as much as it should have. Why is this so? Is
it that more of it is needed, or that other methods
are needed? How can we increase confidence be-
tween the two groups of countries. How can we get
the activation process I spoke of earlier going?

The United Nations Symposium of 1967: Its
Purposes

So, we hope that some of these questions will be
posed in the International Symposium. I am not say-

117

ing that they will be solved, but it will create a bet-
ter understanding of the dimensions of the problem.

We also hope that the new Organization for In-
dustrial Development (UNIDO), which the United
Nations is setting up now, with the full support of
all countries, will play an important part in building
this understanding.

In the marvelous little booklet which I was given
last night to read, on Science and Technology for
Mankind's Progress, I noted that the United States
is spending 22 billion dollars on research — 16 bil-

lion by government and 6 billion dollars by in-
dustry. I was wondering, could we take one percent
of this to examine the effectiveness of the available
methods of industrialization?

We must define the problem. The advanced coun-
tries are spending money. They are giving aid. They
are giving loans. Would it be worthwhile using just
one percent of this total — to see what is the problem
and where are we going?

I want to leave you with this idea to consider.

118

November 17, 1966

Afternoon Session — The Transfer of Technology Through
Enter prise-To-Enter prise Arrangements

Mr. Stern: In this afternoon's session, rather than
being concerned with the role of government, we
shall be concerned with the role of enterprises, pri-
marily private, and examine their role and effective-
ness in the transfer of technology throughout the
world.

The chairman of this afternoon's session is a
scholar of this field, Dr. Hollis B. Chenery of Har-
vard University.

Dr. Chenery: I assume a professor has been invited
to be chairman because he looks at this problem
from the outside while the other speakers are directly
involved in the process. I have some observations on
the process from my vantage point but I shall wait

until the formal participants have spoken and then
comment on some of their themes later on in the
discussion. However, I would say that in my period
with the U.S. Agency for International Development
we were always impressed with the fact that the res-
ervoirs of expertise and the resources to transfer
technology were largely in the private sector, and
that the government was essentially on the side
lines, trying to motivate or facilitate private activity.
To get anything really done on the technological
side seemed to require private actors. It was much
easier to get a dam or a steel mill built than to get
the manager for it and particularly the system, as
Dr Hollomon puts it, in which it was going to fit.
Governments were really only observers in these
aspects.

119

HOLLIS B. CHENERY is Professor of Economics at Harvard University. Cur-
rently his research at the Harvard Center for International Affairs is directed at
developing quantitive analytical techniques for the study of economic development.

He formerly served as Director, Program Review and Coordination Staff,
Agency for International Development (U.S. Department of State), and from
1962 to 1965 was Assistant Administrator for the Agency. Dr. Chenery's early
career included engineering assignments with the P/iillips Petroleum Company and
the Southern Natural Gas Company. Dr. Chenery has also been Economist with
the U.S. Economic Cooperation Administration and Chief of the Program Divi-
sion of the U.S. Mission to Italy for the Mutual Security Agency.

A native of Richmond, Virginia, Dr. Chenery received his B.S. degree in Mathe-
matics from the University of Arizona and in Engineering from the University of
Oklahoma. He was awarded his Ph.D. in Economics from Harvard University in
1950.

Dr. Chenery has carried on many international economic consulting and advis-
ing assignments. Turkey, Italy, Pakistan, Japan and Israel are among the countries
he has thus served.

Market, and the emphasis by every industrialized
nation on exports. All of these are really a recogni-
tion of the need for international markets.

Dr. Chenery: I would like to proceed with the
formal program. Our first speaker is Mr. Elmer S.
Groo, Vice President of I.B.M. World Trade
Corporation.

Mr. Groo: Mr. Secretary, ladies and gentlemen, I'd
like to discuss this afternoon some of the issues that
affect the way a business corporation does business
overseas. In particular, I'd like to focus on the size
of markets compared with the size of technology as
measured in terms of its cost.

Historical Experience in International
Exploitation of Technology

The basic question in introducing technology
abroad, is always the market. Traditionally, interna-
tional business has been effectively organized as a
group of self-contained national markets. Cultures,
customs, language, laws and national tastes have
tended to define markets in terms of national
borders.

•Two decades ago, technologies were simpler and
investments in development were, by today's stand-
ards, rather modest. Technologies like jet aircraft,
color television, computers, with their development
costs running into hundreds of millions of dollars,
were simply unheard of.

It was possible in those days to bring a product to
market with expectation of a profit in the relatively
limited scope of national markets.

The Need for International Markets

The burst of technological developments of the
last two decades, with their enormous costs, has de-
manded the expansion of markets. Almost the only
market that will justify some of today's advanced
technologies is America. And for a company based
in Europe or Asia, or for any company engaged in
national trade, a single unified international market
may be required just to justify the cost of tech-
nological advancement.

There are all kinds of recognition of this fact
around us. The growing emphasis on international
standards, the concept of a European Common

The Conflict of National and International
Markets

Yet, the fact is that national markets do continue
to exist. Each nation has its goals; each nation has
interests of its own which influence its laws and
which dictate common-sense rules for good corpo-
rate behavior there.

So we find a conflict. On one hand the company
seeks an international market to support its invest-
ment in technology. On the other hand it must satis-
fy the national markets and the special needs and
interests of a national economy. So the problem is
how to organize in such a fashion that we can meet
these conflicting needs.

IBM's Approach to the Conflict Problem

Without trying to speak for American business in
general — I'm sure there are great differences be-
tween companies — I'd like to describe how we ap-
proach this problem in our own company.

We start with the assumption that the need for
our products and the function they perform are
pretty much the same around the world. There may
be differences in details but these are a matter of
adaptation, not basic to the design of the machines.
So the technological side of our business is run es-
sentially on a uniform, world wide basis.

Our second assumption is that we must operate in
a given country as a part of that country's industrial
economy, responsive to national goals and interests,
and equipped to provide the same level of support
and service to the customer that we would in this
country. This means that we need a strong autono-
mous country operation.

Let me illustrate, using France as an example.
I.B.M. France is not our largest operation, but it's
one of the largest. It has eleven thousand employees,
thirty branch offices, two manufacturing plants and
a product development laboratory. The employees
are all French, including the general manager. We
learned long ago that we could not really satisfy a
market as well on any other basis. With an American
running an operation in a strange language and a
different culture without an emotional commitment
to the country, we could not learn as well the needs
of the market nor the interests of the government,
nor could we find and hire the best people or man-
age them with the same appreciation and under-
standing.

121

ELMER S. GROO is Vice President of IBM World Trade Corporation. Joining
International Business Machines Corporation in 1941 as a Sales Trainee, he be-
came a data processing sales representative in Philadelphia and was then sent to
Washington, D.C., as a special representative. Following a four year naval career,
he returned in 1 946 to a sales assignment in Philadelphia.

After a period in sales and sales management, he was assigned special duties in
the office of the Executive Vice President, subsequently being appointed Executive
Assistant to the President of IBM in 1956.

He was elected Vice-President in 1959, being responsible for European Opera-
tions for a two year period. His present responsibilities include Personnel, Com-
munications, Executive Development, Government Relations and Administration.

Mr. Groo is a graduate of Drexel Institute of Technology. Mr. Groo is a Direc-
tor of the Business Council for International Understanding.

The principal preoccupations of the general man-
ager of I.B.M. France, are marketing, personnel and
finance. His responsibility for the laboratory is only
administrative. In manufacturing, his responsibility
is somewhat broader but it is still limited to execut-
ing a plan worked out with manufacturing manage-
ment at our international headquarters. While his
advice and counsel are valued and often asked for in
regard to manufacturing, both as it applies to
France and as it applies to the total I.B.M. interest,
he alone does not make a decision as to what prod-
ucts will be produced in his plants nor does he de-
termine production quantities. These are a matter
for international decision because his plant is pro-
ducing for the international marketplace.

When it comes to personnel, he has complete re-
sponsibility to find and hire and train the people he
needs. In marketing, again his responsibility is com-
plete. He gets help from the outside when he asks
for it, but basically he has to sell and service the
market.

Above all, he is responsible for our corporate
posture in his country. It is his job to know market
needs, the attitudes of his government, the require-
ments of his laws, and to see to it that we conform
to them. He is the spokesman for what is best for
I.B.M. in his country and, I assure you, we take his
advice.

We bring together the interests of I.B.M. France
and the interests of the total corporation through an
annual planning process. All operating plans origi-
nate within the country. They are worked up
through several levels of management and finally
consolidated on a worldwide basis in the United
States. During the process there is a good bit of
negotiation on sales targets, marketing programs, the
investment of funds and a host of other considera-
tions.

When the final plan is reached, the country gener-
al manager has specific operating goals and respon-
sibilities which he executes according to his own
judgment. In this way, although he may not decide
the final mission of his laboratory nor the products
to be produced in his plant nor the volume of his
production, he has a clear understanding of his re-
sponsibilities which effectively enables him to man-
age the operation in his own country.

Management of Technology on an Interna-
tional Scale

Now looking at the other side of the picture, with
all the variations in laws, customs, individual prod-

uct needs and the need for responding to national
objectives, how do we manage technology on an in-
ternational scale?

Well, first, when we plan a product we do it on a
worldwide basis. While final specifications are deter-
mined at the headquarters of our development divi-
sion in this country, they reflect inputs from at least
twenty countries around the world. Our product
planners receive market requirements from all of
our large countries, so that when we announce a
product, we know that it will meet the needs not
only of the United States market but virtually every
significant market abroad.

All of our computers, for example, handle not on-
ly decimal arithmetic but sterling as well. Our out-
put printers can print not only Arabic characters,
but the Katakana alphabet used in Japan. Our type-
writers can be supplied with type faces for any one
of 22 different languages. Our banking equipment
deals equally well with American or European
checks.

Incidentally, one of the beliefs that seems to per-
sist is that the country less developed industrially
will be willing and satisfied to buy the products of
yesterday's technology. This may be true in some
industries but it certainly is not so in ours. Develop-
ing nations are aware of today's technologies; they
are not willing to go through all the steps of devel-
opment that we have in the West. Our African cus-
tomers buy the latest, most sophisticated computers
we have to offer and we have such machines in-
stalled today in some inaccessible areas of that con-
tinent. We have learned not to look upon these
areas as second markets for yesterday's products.

International Diffusion of Development
Responsibility

It is one thing to plan a product on an interna-
tional basis and it's another thing to develop it that
way. Yet the pool of technological talent is an inter-
national one, and the ideas that contribute to the
advancement of our particular industry have come
from many countries around the world. We have six
research and development laboratories in Europe
and today we use those laboratories as part of a
worldwide development organization.

This was not always so. For some time we used
our European laboratories primarily to support the
local market. Fifteen years ago, when technology
was simpler, this worked pretty well. As time moved
on we found it harder and harder to make full use
of the talent we had in limiting their mission to the

123

256-707 0-67— 9

needs of a single country or even to a single conti-
nent.

When in 1961 we undertook the development of
a new line of compatible computers in a new tech-
nology, later announced as System 360, we made
the decision to bring the European laboratories into
the worldwide development program. The 360 line
comprises six basic computers, compatible in con-
cept and ranging in size from one designed to meet
the needs of small to medium business, up to a sys-
tem of great speed and capacity for the most com-
plex computing requirements.

The architecture for this system came from a va-
riety of sources, with several basic concepts originat-
ing in our European laboratories. Once the several
units in the line were agreed upon, each laboratory,
whether U.S. or European, was given a specific mis-
sion. The smaller machine came from Germany.
The medium-sized machine was designed in Eng-
land, the larger computers in our U.S. laboratories.
The French, Dutch and Swedish laboratories, as
well as laboratories in the U.S., produced a variety
of input/output equipment necessary to apply the
computers to the wide variety of applications for
which they were to be designed.

In developing a single, compatible commercial
product line, we obviously had a special need to
maintain constant liaison between laboratories in the
U.S. and our laboratories in Europe. With the magic
of today's communications technologies, we were
able to set up a network between the U.S. and Eu-
rope, and by use of fascimile equipment to transmit
not only messages but drawings as well. An engineer
in our laboratory in Poughkeepsie, New York, could
talk with and jointly design circuits with an engineer
in Hursley, England, transmitting designs back and
forth as they worked.

Although we do not take the credit for it, we
think the day-to-day relationships between our en-
gineers, which were made possible by this network,
represented a great advance in bringing the tech-
nological abilities of a lot of nations to bear on the
solution of a single problem.

Manufacturing in Local Markets

We've talked about planning and we've talked
about product development. The final step in our
technical process, of course, is manufacturing. We
plan our production programs on an international
basis but we believe in manufacturing in a local
market whenever the economics of the situation al-
low it.

There are some technical advantages in terms of
closer support for products in the field. Certainly
transportation is simplified and, at least in the Com-
mon Market, the duty picture is more favorable.
The most significant reason, however, that we manu-
facture abroad, is that it involves us in the local
economy in a positive, contributory way. We employ
people, we buy parts and components from local in-
dustry, and we contribute directly to the export pro-
grams which are so important to a national econ-
omy.

Training of Work Forces

With all its pluses, the manufacture of a compli-
cated product in more than one location poses some
real problems, especially when the manufacturing lo-
cations may be thirty-five hundred or even eight
thousand miles apart. There are, obviously, some
duplicate investments in production equipment.
Much more important are the duplications in the
training of a work force. Our particular products
involve a high skill-level, and we expend a great
deal of time, money and effort in assuring that our
people have the same level of training in every loca-
tion.

One of the things we do to meet the training need
is to transfer people for a temporary period of six or
twelve months to laboratories where products are
developed and to plants where technical control will
remain. The people return as fully trained as their
counterparts in other plants and can act as a skilled
cadre to set up a full work force when a product is
released to production.

Standardization

We make a special effort to maintain worldwide
engineering levels. We believe that this is fundamen-
tal for many reasons, not the least of which is pro-
viding the same services to our customers, regardless
where they are. To start with, we have an active
effort in standards. An important segment of our en-
gineering force is devoted entirely to the problem,
and all of our specific product design is executed
against a predetermined set of standards. Design
drawings carry both the Anglo-American system of
feet and inches and the metric system used by the
rest of the world. This gives us a common base, and
as we make improvements in products — and we do
— we transmit from the point of engineering control
to all points of production, via computer, the latest
engineering changes on an overnight basis, so that

124

they can be reflected simultaneously in current pro-
duction at all points where the machine is made.

Function of Patents

Another facet of our efforts in technology and
which has to be an influence in any fast-moving
field, is that of patent protection and access to the
patents of others. We maintain patent departments
in the larger industrial countries of the world and we
file our patents on an international basis regardless
of their source. An active program of licensing pro-
vides the freedom of action that enables us and
others in our field to develop and bring to the mar-
ket products of the latest technology, without fear of
accidental patent infringement.

IBM Looks at the Future

A Symposium such as this is concerned as much
with the future as it is with today, and I'd like to
take just a minute to talk about the future.

Recently we conducted an experiment with high
school students in New York City. Through tele-
phone connections, they had access to a computer at
our research laboratory in Yorktown Heights, New
York, which helped them do their mathematics
homework. Professor Quinn told me that Dartmouth
College is doing the same for students at Dart-
mouth. On numerous different campuses of Ameri-
can colleges today, computers are assisting instruc-
tors in teaching a variety of academic subjects to
undergraduates. And early this month the first time-
shared system designed specifically for educational
purposes went into operation, assisting in teaching
over a hundred first-grade students in Palo Alto,
California.

A number of hospitals are using computers today
to assist in analyzing electrocardiograms, blood
tests, and in a series of other diagnostic applications.
One airline uses computers to make it possible for
an airline passenger in Rome to request a seat on a
plane out of New York and to get confirmation
from his agent in a matter of seconds. So the time-
sharing system, the use of computers in education
and medical science are already a reality. In certain
fields the worldwide computer network is already in
use. These are only the beginnings of what might
come about just in our industry in the next ten
years.

I'm sure that other industries have the same en-
trancing possibilities. The significant thing is that the
direction of technology continues to move toward
serving the individual, whether he be American,
European, Latin American or Asiatic.

A meeting such as this, examining the practical
problems of bringing technology to the individual
wherever he is, is enormously significant. One thing
that it underlines is that our success in business or-
ganizations will be very much measured by how well
we carry our technology to international markets
and, perhaps equally significant, how aggressively
we bring foreign technology to use in our own mar-
ket.

Improvements in communications and transpor-
tation will create a market demand which is more
international than national in character. Television
satellites and supersonic flights will certainly break
down national barriers. I suspect that there will con-
tinue to be nationalism, and national markets, in a
certain sense, for a long time to come; but I believe
that the mobility of people and the mobility of ideas
will assure the fact that there will also be mobility of
technology.

125

Dr. Chenery: Our second speaker, Dr. Aurelio Pec-
cei, will give us a European view of some of the
same issues. Dr. Peccei as far as I can tell wears
three hats. He is managing Director of the Olivetti
Company; he is also head of Italconsult, an interna-
tional consulting and engineering firm which deals
with underdeveloped countries, and he is on the Ex-
ecutive Committee of the Fiat Company. He tells
me he's going to draw on all of these backgrounds
in his presentation.

I might mention my own one experience with the
Olivetti Company, when I was working in Italy
some years ago. I was much impressed in visiting a
new Olivetti plant, outside of Naples, when I was
told, first, that almost none of the labor force had
had any previous experience with this technology
and that the employees had been selected on a psy-
chological basis rather than on their experience, and
second, that in two years the Naples plant had
reached the productivity of the Turin plant through
proper training and proper management. Such
transfer of technology within Italy itself is a fasci-
nating achievement because the south of Italy, par-
ticularly in the past, has had the same kinds of edu-
cational deficiencies as the underdeveloped countries
have now. I hope that Dr. Peccei may be able to tell
us that such development can also take place else-
where.

Dr. Peccei: Mr. Chairman, Mr. Secretary, ladies and
gentlemen. I am the last formal speaker before the
discussion and I suppose that by now, after the bril-
liant addresses of yesterday and today, you will be
well prepared for an anticlimax.

I enjoyed the symposium immensely. I learned
very much from the previous speakers and from the
panelists, and from the scientists back in the labs as
well, but I would flatly refuse to submit to a
proficiency test on what I learned.

Before entering into my subject — which, as I un-
derstand it, should mainly refer to industrial tech-
nology — I want to make a few general remarks.
First, I submit that the problem of spreading tech-

nological progress ranks at least equal in importance
to technological advance itself.

The Problems of Technology Transfer

There is a continuous and increased acceleration
in the advance of science-based technologies. Under
proper conditions, progress has become practically
self-propelling. The dramatic technological revolu-
tion we are going through is indeed radically trans-
forming our society: it generates "real mutations," a
change in kind, not merely in degree. The conse-
quence is that the dialogue, even between two na-
tions, friendly but having a different level of devel-
opment, tends to become extremely difficult, as if it
were between two different species of civilization.

This is why I maintain that, in order to keep a
fairly homogeneous pattern of society for the
different human groups which should stand together
— for instance, the nations we would like to see
forming the Atlantic Community — we should devote
an equal effort, as we go on producing technological
progress, at devising how it can be moved speedily
from one country to another in the Community
area. Otherwise, this technological bounty, not prop-
erly distributed, will become a dangerously divisive
factor. And, as we live in a time of history when
regional or continental integration and unity has be-
come an imperative prerequisite for orderly
progress, if not final survival, this danger needs to
be underscored.

When we say that the dimension of the nation-
state is nowadays inadequate practically on all
counts; when this inadequacy applies equally to na-
tion-groups of sub-continental size, such as EEC
and EFTA; when Europe itself is not enough, and
our objective has to be "a Europe-plus;" when the
very Atlantic Community should be conceived not
only as an irreversible partnership among West
European and North American nations, but also as
the hard core of a wider cooperation area and the
rallying point for other important outside regions;
then, we must conclude that revolution-carrying
technologies should in fact move as freely as possi-
ble within the inner Community area; and also in
reasonable measure to and from the outer regions
flanking it.

This has become one of the urgent and funda-
mental problems we have in front of us, perhaps not
less important for our future than the quest for
peace in a nuclear era and birth control in the face
of demographic explosion.

126

Effect of Development Level on Technology
Transfer

I have here a second general remark. There are,
on the other side of the coin, a great many difficul-
ties in the transfer of technology, however vital this
transfer might be. Among others, a condition to
carry it out successfully is the existence of compati-
ble levels of development and organization among
the countries concerned. This means that only in the
general framework of compatible development levels
can transfer of technology, enterprise-to-enterprise
or otherwise, be effective. Experience has shown
that to absorb into its national fabric and socio-
economic setup the technology which is being trans-
ferred to it, the "host country" must be prepared to
receive it.

The concept of a compatible level of development
does not refer only to the technological gap, which,
if too great, would not permit the transplant of tech-
nology between two countries. It involves the capac-
ity of the recipient country to live with the new
technology, adapting it to its own economic organi-
zation, basing on it a process of industrial
diversification, assimilating it into its own education-
al institutions, so that this alien input may be trans-
formed into a national asset.

Effect of Nature of Development Interests

There might be also sectorial incompatibility. For
instance, I would question the validity of the
transfer to my country, Italy — if it were the case —
of some of the U.S. space technology. This type of
activity is and will remain for a long time alien to,
and therefore its transplant would be incompatible
with, her kind of development.

For another example, we may take the Soviet
Union. Here we have a technologically and cultural-
ly advanced nation "par excellence." Yet her organi-
zation level is not compatible with that of the U.S.
or even Europe, in some broad and fundamental
areas of human endeavour and interest. This is the
case of a whole range of mass production-mass dis-
tribution activities which characterize our consumer
economy. The Soviet system simply is not rigged to
take in, and profit by, Western technology in some
fields, such as motorization and automation. The
transfer from the West to the Soviets of, for exam-
ple, our automotive technology — planning, design-
ing, tooling up, manufacturing, marketing, selling,
financing, handling, servicing and finally destroying
motor cars — of course does not present insurmoun-
table difficulties. But even this will require a basic

reshaping of the Soviet organization, and sometimes
the recourse to odd solutions, such as an extreme
verticalization of their manufacturing setup.

This transfer of technology will in any event re-
quire rather a long time and, in my opinion, cannot
materialize through the effort of Europe alone. The
same can be said of another example concerning the
manufacture and dissemination of modern office ma-
chines in the Soviet administration, which is em-
barking only now in a process of mechanization and
computerization similar to that existent in the U.S.
and also in Europe, and which, although so ad-
vanced, is nevertheless still in the midst of a further
profound evolution. On the other hand, the transfer
of technology between countries and in fields having
compatible levels of technico-scientific development
and organization can be most fertile and effective, as
many examples, including that of Olivetti-Under-
wood, will indicate.

Effect of Stage of National Development

On the other extreme, the less developed coun-
tries offer the most evident necessity and the highest
difficulty in transferring technology. Here company-
to-company transfer of new technology can be effec-
tive, especially to countries whose system is so
different from ours as not to permit an easy transfu-
sion of our technology. I am sure that we are not
yet able to assess in depth what might be the after-
math, in third world countries, of the second indus-
trial revolution now taking place in the most ad-
vanced countries.

Two-thirds of the world population have not yet
adjusted themselves to the first industrial revolution
which started more than two hundred years ago.
Technologies simpler than those we are now cur-
rently considering — for instance those necessary for
making agricultural implements, conventional and
machine tools and pumps, for improving agricultural
yields or better harnessing and using surface water
— have not yet been transferred to many of those
countries which nevertheless are euphemistically la-
beled developing countries. The consequence of this
maladjustment is unending wrath and turmoil.

Many of these less developed, generally small and
often isolated countries, are so attracted by our
breakthrough and achievements that they end in
aiming at industrializing themselves chiefly along the
wrong avenue of the glamour industries and technol-
ogy. In this manner, efforts are displaced from more
useful fields and, if eventually these more sophisti-
cated technologies are transferred, they will be ill

127

AURELIO PECCEI is Chief Executive of the Olivetti Company, to which position
he was appointed in 1964. Since J 957, he has also headed Italconsult, an interna-
tional consulting and engineering firm headquartered in Italy and specializing in
development projects in Africa, Asia and Latin America.

He has also been connected with the Fiat automotive company since 1930,
where he has special responsibilities in the area of international affairs and is a
member of the Executive Committee.

A native of Turin (1908), Dr. Peccei received his Doctors degree in economic
and commercial science from the Turin University.

absorbed, and cause more dislocation and delays
than good. In conclusion, my point is that, as it is
difficult to regulate the flow of technology to less
developed countries, it is equally difficult to transfer
the appropriate technology to them.

Need for Emphasis on Social Facets

This is a major international task. To carry it out
we have to concentrate not only on the scientific
technologies, but, even more so, on social and politi-
cal science studies and on social technologies. These
latter deserve a higher priority than we have hereto-
fore granted to them. This does not apply only when
we deal with underdeveloped countries: it holds also
when we look around at our highly developed na-
tions.

To illustrate these points, I will quote from the
experience of the companies with which I am asso-
ciated.

The Olivetti-Underwood Case

The Olivetti experience in the United States
affords a case example of the possible transfer of
industrial technology, in the broadest sense, between
two private corporations, operating in a sector in
which the two countries involved have compatible
levels of development. It is also a case example of
cross-fertilization, demonstrating that cooperation
— not only in technology, at that — between Europe
and the United States can be a two-way affair,
if earnestly pursued.

Olivetti took over control and management of the
then Underwood Corporation in the fall of 1959.
Initial investment for the purchase of approximately
one-third of the Underwood stock was in the order
of 8 million dollars. Throughout the years
1960-1963, the initial investment was considerably
increased, and today Olivetti has total ownership of
its U.S. subsidiary — whose name is now Olivetti Un-
derwood — with an investment of almost 100 million
dollars. Yet, in our judgment, even more significant
than the size of the investment is the total involve-
ment of managerial techniques in the various areas
of the Underwood venture: manufacturing, servic-
ing, marketing, training and management in general.

Olivetti brought to the United States its manageri-
al techniques and philosophy, its industrial design,
its salesmanship, its personnel training; but instead
of reshaping Underwood merely as a reflection of
Olivetti, a new experience was started. Olivetti,
in turn, tested and received from this country,

through Underwood, new methods and ideas. The
result was the emergence of a set of revised tech-
nologies in all sectors concerned, which constitute
an important asset not only for Olivetti Underwood
but for Olivetti as a whole.

Our estimate at first sight had been that the Un-
derwood typewriter factory in Hartford obviously
needed substantial rejuvenation; but the vast sales
organization of Underwood, spreading all over the
United States, should have represented the positive
part of our purchase.

The Production Problem

The streamlining of the production facilities at the
Hartford plant involved the challenging task of pro-
ducing at an acceptable cost per unit. First of all, we
redesigned the products, pooling together the experi-
ence of Hartford Engineers and designers and of our
experts in Italy. In this area a fruitful cooperation
immediately developed, without friction or delay.
Then, to produce a line of new typewriters, the fac-
tory was re -tooled with modern equipment and ma-
chinery, and new production methods were intro-
duced such as were used in other Olivetti factories
around the world. This brought about a rapid trans-
formation of the old factory which, even within its
old brick walls, in a few months' was put in a posi-
tion to turn out new products under high standards.

The Marketing Problem

This, however, proved in reality less trying a job
than the reshaping of the sales organization, the
marketing services and the organization to maintain
and repair all models of our machines. Soon after
takeover it was realized that to sell and service the
range of our products, sales and services personnel
had to be trained in great number. This was done on
the basis of a crash program which started by bring-
ing to the United States a group of Olivetti instruc-
tors from the Olivetti Training Center in Florence.

Olivetti's methods, both in recruiting and training,
were already quite sophisticated, and we felt they
would provide a positive basis for the rebuilding of
Underwood. Yet, as we acquired a deeper knowl-
edge of the U.S. market, we realized that a number
of adjustments were needed in our own techniques
and methods, to better respond to our new environ-
ment. This is the case, for instance, of maintenance
and repair activities, where Olivetti's experience had
been both original and extensive. However, when we
transplanted to the United States our methods for
the instruction of service personnel, we found that

129

new methods being explored in this country in the
general field of education offered good possibilities
of use to us. Thus we were among the first to adopt
methods of programmed instruction based on the
experience of the U.S. Armed Forces and the stud-
ies of various organizations and universities.

Our interest in continuing this process of transfer-
ring U.S. knowledge back to Italy is evidenced by
our program for retraining Olivetti middle manage-
ment in various business schools in the United
States. Our aim is to expose our management to the
fresh influx of modern business teaching, as prac-
ticed in the U.S. Also, in R&D, we have developed a
regular exchange of information and experience be-
tween our base in Italy and the Olivetti Underwood
research unit in Hartford.

Personnel Management

In the field of personnel management, we pro-
ceeded on the basis of the Olivetti philosophy, which
considers the human element as the most valuable
asset. This basically humanistic concept, which rec-
ognizes in our human potential the greatest element
of strength for the corporation, was enforced when-
ever possible. In this respect one should note that
the Olivetti approach was probably a step ahead of
the standard U.S. business practices of the time, and
we are gratified in seeing the evolution which has
occurred since.

As the result of all these combined efforts, Under-
wood, which for nine years had been a nonprofitable
operation, is again in the black, as Olivetti Under-
wood, since early 1964. Fortune Magazine in its Ju-
ly 1966 issue, listing the major 500 U.S. corpora-
tions, singled out Olivetti Underwood for the most
spectacular proportional gain of 1965. In this case
of technological exchange between Olivetti and Oli-
vetti Underwood, one should say that if it is not
unique, neither is it the rule of transfer of technolo-
gy across the Atlantic. Furthermore, we must bear
in mind that its successful and extensive results took
place between two companies belonging to the same
group.

Other Instances of Technology Exchange

Speaking as an Italian and coming from what is
generally considered in the U.S. a "host country," I
must say that not always has the experience of
transferring technologies from your country to my
country been satisfactory, either at the receiver's
end, or, I gather, at the giver's end. I will not quote
names or point out instances. There is, however, I

am afraid, a growing belief in Italy and Europe that
the negotiation of an agreement with a U.S. com-
pany is extremely difficult when the transfer of im-
portant technology is involved; and that its imple-
mentation eventually becomes even more difficult in
the long run. This is probably due to the fact that a
dynamic company, setting the pace in innovation
and technological development (admittedly a U.S.
company, as this is the most common case) hardly
sees its interest in farming out to another company
in Europe the most precious ingredient of its suc-
cess — its know-how or its painfully acquired achieve-
ments in R&D.

The U.S. company may be induced to adopt this
course (instead of installing a subsidiary directly in
Europe, for instance) if it is temporarily too busy at
home, or with the aim of gaining a foothold in the
European market by a combination with local
partners. But generally, once the initial honeymoon
is over, the technologically senior U.S. partner,
which by virtue of this fact is also the prime mover
of future developments, is bound by the logic of its
dominant position to escalate its requirements: from
a technical agreement to an equity participation, and
from a minority position to control of the European
company. And this may spell difficulties.

There are, of course, exceptions. Such is the case
notably of new technologies developed by small
companies which cannot exploit directly in Europe
their know-how and patents, and prefer to do it
through a license agreement. Another case is when
the patentability is doubtful or the patent rights are
difficult to enforce. The practice of cross licensing,
which is spreading on the spur of these difficulties,
may prove very beneficial for a more generalized
transfer of technology. Nevertheless, serious limita-
tions remain in the transfer of technology between
companies when they do not belong to the same
group. And this applies not only to the case of the
U.S. versus Europe, but also to that of Europe ver-
sus less advanced countries.

Wholly-Owned Subsidiaries vs. Licensees

The example of Olivetti comes in handy again.
Whenever Olivetti considers transferring its technol-
ogy to another country it never chooses to deal with
third parties, but rather tends to establish wholly-
owned subsidiaries for the manufacture of Olivetti
products. This of course is a practice that may not
be applied everywhere and therefore has a restrictive
element imbedded in it. This approach was followed
by us in the United Kingdom, Brazil, Argentina,

130

Canada, South Africa and Mexico, with very good
results of technological transfer. One exception is
Spain, where simple control of that subsidiary had
to be substituted for total ownership, as local regula-
tions limit foreign participation in certain industries.
I know of many other corporations having a simi-
lar policy, which, inter alia, facilitates a rational-
ization of production among manufacturing estab-
lishments located in different countries. The spread
of the multi-national company responds, among
other things, to similar needs, and helps the interna-
tional flow of technology, albeit within a restricted
circuit. In two cases Olivetti gave to third parties the
license for the exploitation of its designs and know-
how. The first case was India, where Olivetti sup-
plied the necessary machinery, licenses and know-
how for the establishment of a teleprinter factory,
totally owned and operated by a state company. The
second case is the agreement still under negotiation
with the U.S.S.R. In both cases, this was the sole
way to enter a market altogether closed and with a
view to furthering future opportunities.

Automotive Industry Examples

Another interesting case of transfer of technology
to subsidiary companies tightly controlled by the
parent company may be found in the automotive
industry. I remember, from my experience, the
rather chaotic creation of the automobile industry in
Latin America. When the local governments gave a
more or less indiscriminate green light, all the inter-
ested parties jumped into a competitive struggle to
enter those markets, with questionable benefit for
either the host countries, the companies, or finally
the customers, because of the splinter industries
which resulted from this free-for-all.

Only in the case of the American and European
motor car manufacturers (General Motors, Ford,
Volkswagen and Fiat) which established wholly
owned or strictly controlled subsidiaries was the
transfer of technology satisfactory. In most of the
other cases, if I am not wrong, the experience has
been on the whole extremely poor, which confirms
the limitations I mentioned above.

As for the recipient countries, they received no
doubt an injection of a good dose, perhaps an over-
dose, of modern technology, which could not be
readily absorbed and will require a rather long peri-
od of internal adjustments. In fact the intrusion of
this most complex industry has caused some severe
dislocations in the unprepared economic fabric of
those countries which in turn proves, once more,

that the transfer of technology is optimal among
countries with a compatible level of overall develop-
ment.

We may conclude that, although private enter-
prise is the central element of development in the
market economies of the Western countries, it can-
not be counted on as the exclusive factor for the
international transfer of technology. Our corpora-
tions must live up to the rules of competition. This
very fact limits their willingness to transfer tech-
nologies to other companies.

As I mentioned before, the tremendous invest-
ments required by modern R&D causes any com-
pany to be extremely reluctant to transfer to others
its advanced technology, prior to its full exploitation
by the company itself, either in the home market or
through direct industrial operations abroad. Also,
there are other limiting factors.

I am therefore afraid that the open market for
technologies, though representing an efficient and
fertile exchange medium, is not broad enough to
cause the international technological flow to happen
at the speed and in the measure which is nowadays
required.

In our rapidly changing world we should not feel
bound by traditional and established yardsticks. As
in the case of domestic basic research programs,
funded and handled by public agencies and academ-
ic institutions, also for the international exchange of
basic and applied technology, a new, imaginative ap-
proach should be devised, whereby private ways and
means may be supplemented by intra-government
arrangements. This point was abundantly and mas-
terfully touched upon last night and this morning.
Highly provocative thoughts and questions were ad-
vanced.

We have come to a point where action and
answers and remedies are required, both at the na-
tional level and in Europe. Some agonizing reap-
praisals are needed in mentality, attitude, education,
environment and policies also, with the assistance of
the U.S. and at an international level as well.

A Plan for International Cooperation

The plan for technological cooperation recently
proposed by the Italian government is meant as a
contribution in this direction. This plan calls, in the
first phase, for the signature of a technological
agreement between the governments of the NATO
countries with the possibility for other governments
to join at a later date. To reach such an agreement,
the interested government should first of all sub-

131

scribe to a joint political declaration of intent in this
vital area, and then call on a special conference to
lay the basis for a unified European technological
organization which, in turn, may pave the way for a
true cooperation, as more or less equal partners,
with the United States. Prime Minister Wilson re-
cently outlined a somewhat similar proposal.

The technological organization should promote
initiatives, agreements and infrastructures in Europe
necessary to foster European technological develop-
ment for the next ten years. The plan also suggests
that European and U.S. cooperation may start with
a project-by-project approach, as indicated in Presi-
dent Johnson's proposal in relation to the possible
common endeavor by Europe and the United States

in the Jupiter project. This proposal implies the ac-
quisition by European countries of U.S. technology,
without charge in the case of Government-owned
technology, and through payment in the case of pri-
vate patents.

The Italian plan is now under study and I under-
stand it will be examined by the Council of Minis-
ters of the NATO countries this December. I fer-
vently hope that this and other means will be
devised and implemented so as to assure a two-way
flow of technology across the Atlantic, consistent
with the vital requirements of a homogeneous devel-
opment and transformation of the U.S. and Euro-
pean societies.

5S33S38SS3S3SSS

QUESTIONS FROM THE FLOOR

Professor Chenery: Both of our speakers have re-
ferred to the quality of "appropriateness" in the
technology to be transferred. I would like to point
out that the total capital investment in all underde-
veloped countries, comprising nearly a billion and a
half people, is less than the total annual capital in-
vestment in the United States. The need to econo-
mize on investment embodying any new technology
is obviously enormous. The capital invested per
worker in underdeveloped countries is now one
tenth or one twentieth of what it is in the United
States.

Of course, this does not mean that each industry
in an emerging country has to be designed so that it
uses only a small proportion of capital, but it does
mean that only a very small number of sectors in
such economies can be equipped with the capital-
intensive technology to which the U.S. and Europe
are accustomed.

Let me suggest that we think about the relations
among economic sectors. It is probably efficient to
have a small number of sectors, even in quite primi-
tive countries, that do have the latest technology,
provided they fit into the environment, as Dr. Rah-
man proposed. Fitting into the environment may
mean that the construction industry which builds the
buildings might employ completely unautomated
means, because that can be done efficiently under
these circumstances, whereas the machines which
operate in the buildings might be of the latest de-
sign.

The advanced countries have to figure out, some-
how, how to transfer technology to underdeveloped
countries, even though it is not always the same
technology which they are using themselves. This
problem is probably relatively easy to solve techni-
cally, if somebody were willing to finance even a
half-billion dollars worth of R&D on designing ap-
propriate technology for India or Pakistan or other
countries at that level of development. The princi-
ples are known; the trouble is there is no ready way,
even though the technology would itself be profita-
ble once it is established. There is not now a mecha-
nism which brings together the resources in the pri-
vate sector with the users in the private sector. This
is the gap which has bothered governments and the
economists for a long time. The profitable interna-
tional transfers are going to take care of only a
small part of the problem. Let me invite a few com-
ments on this from the audience before we turn to
our formal discussants.

Mr. Wionczek: It may be of interest to this session
of the Symposium to know some preliminary results
of a study prepared recently by me for the United
Nations Secretariat on the subject of the transfer
of technology to the developing countries through
enterprise-to-enterprise arrangements. This case
study dealt explicitly with issues arising in Mexico,
a country which, because of its very satisfactory
economic performance in the past two decades, is
considered today semi-industrialized.

132

A cursory survey of the local scene discloses that,
at the present state of Mexico's industrialization
involving implementation of heavy and intermediate
industries, technology imported from abroad is of
crucial importance. This foreign-originated technol-
ogy flows not only from foreign private enterprises
to private enterprises in Mexico, but also to firms
fully owned by the State or with minority public
capital participation.

The massive transfer of foreign technology to
Mexico and the growing size of payments for these
transfers led to the feeling, which is spreading
throughout the country, that because of the fact that
Mexico cannot afford in the long run to finance the
cost of technology acquired abroad through tradi-
tional enterprise-to-enterprise channels, some new
arrangements in this field will have to be devised.
The present debate in Mexico runs along the follow-
ing general lines:

The country cannot afford to abandon its objec-
tive of rapid absorption of new technology and to
use "second-hand" know-how because of longer term
development considerations — especially the need to
diversify exports.

For political reasons, Mexico cannot permit the
complete technological domination from abroad
through arrangements tying up new technology to
private foreign investment exclusively.

Both for political and economic considerations,
foreign private capital should plan gradually to with-
draw, in agreement with other countries, from indus-
trial activities in which technology is relatively stable
or where there is ready access to non-proprietary
know-how that may require no more than advisory
services to the local capital replacing the foreign-
controlled investment;

On the same grounds, foreign capital should con-
tribute to the development of local applied scientific
research in areas of dynamic technology;

Moreover, the cost of foreign technology to
Mexico must be lowered through external financial
assistance and general liberalization of conditions
under which technical services and licensing and
engineering agreements are negotiated between for-
eign owners of technology and Mexican private and
public enterprises.

The position described above seems to imply many
legitimate grievances of a rapidly industrializing
society which faces technological power of the more
advanced countries and whose dependence upon
foreign technology continues to increase.

During my interviews with state officials in charge

of industrialization, experts engaged in technological
research and executives from industrial enterprises,
opinions were heard that a relatively limited relation-
ship exists between the nature of transferred tech-
nology and modalities of the transfer itself. The
picture which emerges is rather that the problems
of transfer are more closely related to the intensity
of technological change and the respective size of
local firms receiving technology from abroad.
Another important element is considered to be the
existence or absence of corporate links between the
foreign owner and domestic receiver of technology.
Large state-owned or controlled enterprises in
Mexico do not seem to face any major problems in
respect to acquiring adequate technology from
abroad. Larger domestic-owned private corporations
in Mexico seem also to show a growing ability to
shop for available technology around the world and
especially to discern between patented know-how
available only through license agreements and non-
proprietary technology. Unless the purchases of
technical know-how are tied to purchases of capital
equipment through medium or long-term export
credits, these larger enterprises follow the strategy
of diversifying their sources of know-how through
entering into separate agreements on designing and
construction of production facilities, on technical
services covering provision of technical information
and on licensing agreements covering patented
knowledge. Very often these large enterprises hire
international consultants of great prestige for the
purpose of feasibility studies and ask them later on
to act as advisors on choice Of foreign technology
and its sources.

The situation is very different and more difficult
in the case of small and medium-sized industrial
enterprises in Mexico. They face practically only two
alternatives: (a) buying packaged technology abroad
in the form of a plant which incorporates the design
and construction of facilities and patented know-
how and technical services; or (b) following the
strategy of larger enterprises by negotiating separate
agreements with foreign technology owners at differ-
ent levels. Because in Mexico both the state and
private manufacturers of capital goods are unequivo-
cally opposed to importation of packaged plans, a
small or medium-sized industrial enterprise finds it
very complicated and often very expensive to acquire
new technology from abroad. Normally, it finds it
necessary to make a single arrangement with a
foreign firm having access to all phases of technology
required and not available from within the country.

133

This last choice inexorably leads to corporate links
which many small and medium enterprises try to
avoid in fear of the undue degree of control by the
foreign partner.

These are some of the preliminary findings of my
survey. They point out a need to start much
broader research on this subject, possibly with par-
ticipation of experts from both the developed and
the developing countries. The U.N. Fiscal and
Financial Branch will undertake such pioneering
studies in 1967. The issue itself has a high political
content and may become within a short time a source
of considerable friction between the owners of new
technology and the developing countries.

Professor Rey: I am scientific advisor of Nestle-
Alimentana Company of Switzerland. I wish to add
to what has been said this morning on the techno-
logical gap. I believe that there is not only a tech-
nological gap between Europe and the States, but
also a technological gap between Europe, the States
and the Far East.

Nevertheless, in our own particular case, we have
gained a lot by establishing close connection with
Japanese companies and with American companies.
Besides, we have a subsidiary research establish-
ment in the States, and for that reason have elimi-
nated any technological gap between the European
operations and the American operations of the same
European company.

As far as Nestle is concerned, we are involved
in manufacturing and sales in more than 100 coun-
tries, and we have research establishments in several
places in Europe as well as in the States. However,
when we are faced with a need for very specialized
types of technology, such as when we became inter-
ested in radically new sources of food for the future,

we went out to find partners who could give us the
technology and the know-how in their specialized
fields. It was announced last July that Nestle entered
into a joint venture with a company in New Jersey
— a typical case where two big companies with com-
mon interests in a given field can complement each
other's know-how. This, in my opinion, is one of
the best kinds of enterprise-to-enterprise agreement;
they are non-competitive and complementary.

Dr. M. Kersten: I am the President of the Physikika-
lisch-Technische Bundesanstalt of Braunschweig,
Germany, and I would like to make a remark
about the international transfer of technology by
national standards institutes. Perhaps my colleagues
at the National Bureau of Standards are too modest
to speak about it. All these national institutes are
increasing their cooperation, especially with the
developing countries. Some cooperation has been
in effect, as in our case, since the beginning of this
century.

I would like also to remark about the role of
fundamental measuring devices, as a means to trans-
fer of technology. It is very important at the start
of the industrialization of a developing country to
provide a modern measurement system and stand-
ards, including the newest methods. Sound measure-
ments lead to sound industrial and social life. The
national standards institutes must see that education
toward this point of view is their common duty. I
will add only that collaboration among all the
national institutes should be encouraged. The
United States, Canada, and the United Kingdom,
Germany, and so on are already doing so. This
is a vehicle for the transfer of technology which
extends way beyond fundamental units and measur-
ing methods.

134

JOHN H. DESSAUER is Executive Vice President of the Research and Advanced
Engineering Division of Xerox Corporation, and Vice Chairman of the Board of
Directors. First joining the research department of Agfa Ansco Company when he
came to the United States in 1929, he became associated with the Rectigraph
Company in 1935, shortly before it was purchased by the Haloid Company, fore-
runner of Xerox. He established the research department there, engaged in a
search for new products and, together with Joseph C. Wilson, explored the xero-
graphic (electrophotographic) process when it was publicized in 1945. The re-
search effort which Dr. Dessauer now directs for the Xerox Corporation is the
outgrowth of the Haloid Company's research established by him in 1938.

A native of Aschafjenburg, Germany (1905), Dr. Dessauer, after receiving his
early education there, went on to the Albert us Magnus University in Freiburg for
Liberal Arts studies. He then received the equivalent of a B.S. degree in chemical
engineering from the Institute of Technology in Munich, followed by his Masters
and Doctors Degrees in engineering sciences at the Institute of Technology in
Aachen, Germany; both cum laude.

Professor Chenery: Thank you very much. I think
we should now turn to the first of our formal dis-
cussants, Dr. John Dessauer, who is Executive Vice
President of the Research and Advanced Engineer-
ing Division of the Xerox Corporation.

Dr. Dessauer: With your permission, I would like to
limit my comments to the experience of Xerox Cor-
poration, since I feel that I must disqualify myself as
an expert in this complex situation of technology
transfer.

Required Characteristic for Successful Transfer
of Technology

Now in our experience, the transfer of technology
must have one very important characteristic in order
for it to be successful. It must be mutually
beneficial. It cannot be like a blood transfusion,
where the donor does all of the giving and the re-
ceiver gets all of the benefits. It is true that relation-
ships like that can exist, and it is also true that most
lay people and, in fact, most taxpayers think of
technology transfer in those terms.

But, it has been the experience of those of us who
work in this field of industry that in order to be
viable a relationship must benefit both parties — the
transferor and the transferee. Perhaps I can illus-
trate such a viable, mutually beneficial relationship
by telling you how Xerox approached the problem
of Technology Transfer through an enterprise-to-en-
terprise arrangement.

Formation of Rank Xerox Ltd.

In 1956 we formed an affiliated company, Rank
Xerox Ltd., with The Rank Organisation of England
as our partner. This company was formed to take
advantage of our technological development and
patent position and also to utilize the assets which
The Rank Organisation had to offer. These assets
included not only money but also experience in in-
ternational distribution and services. Xerox invested
technology in the form of know-how and patents.

The Rank Organisation invested money, internation-
al operating management and manufacturing and
distribution capabilities. The profits are shared on a
50-50 basis up to a datum point. Beyond this, Xer-
ox Corporation receives two-thirds of the profit. The
datum point can be changed according to the capital
invested by Rank. Based on this agreement, Xerox
Corporation does all research and development
work and transfers the results, subject to all U.S.
regulations, to the British-affiliated company.

The British Rank Xerox, in turn, followed this
same pattern and set up a Japanese company jointly
owned with Fuji Photo Film under the name of Fuji
Xerox.

Mechanics of Technology Transfer

During the ten years following 1956, Xerox trans-
ferred the technology it applied to the development,
design and manufacture of such machines as the
Copyflo, the 914 and 813 copiers and the 2400
copier/duplicator.

This transfer was accomplished in the form of en-
gineering drawings of parts and assemblies, manu-
facturing fabrication and assembly process instruc-
tions, consumable material formulations and
specifications as well as product service procedures
to be used by the technical sales forces. We are for-
tunate that, in our field, the same products identified
for our national U.S. market have to date qualified
for international usage, and we foresee that this will
continue. In the past, a certain amount of adapta-
tion (Anglicize and Nipponize) for English and Jap-
anese requirements had to be accomplished. With
new products on the drawing boards at the first
stages of development now, we are trying to come
up with a design which will fit the world-wide re-
quirements. This is accomplished by giving our Brit-
ish and Japanese associates a voice in the selection
and specification-writing of new programs as well as
having representatives of the affiliated companies
as part of the technical development and design
teams in Rochester when we get under way.

Our experience has been a most happy one. The
only serious problems have arisen from the need for
more international standards, since Japanese System
is based on the "CGS" system, and we here use the
inch and ounce approach.

Perhaps the best way to confirm my claim for a
very successful experience of technology transfer
would be to state a few figures.

136

Results of Technology Transfer

Rank Xerox Limited has grown from 1956 to the
present, to a company with manufacturing plants in
three locations in England, one in Holland and,
through the affiliated Fuji Xerox, with three plants in
Tokyo. It has developed distribution and service fa-
cilities in 20 countries and territories, and the annual
growth for the fiscal year ending in June 1966 has
reached the 124 million dollar level. This made

Rank Xerox one of the hundred largest companies
in Europe in less than 10 years.

By comparison, Xerox Corporation's sales have
grown during this same period from 24 million dol-
lars to over 393 million dollars last year and to an
annual rate of over 500 million dollars this year.

You may recall that I started out by saying that
for a transfer-of-technology relationship to be suc-
cessful, it must be mutually beneficial. The above
figures give evidence of the fact that this has been
just such a relationship.

137

Professor Chenery: Whether by accident or design
in the programming, all three of our formal dis-
cussants have transferred technology from Europe
to the United States. Our last two are both Dutch-
born U. S. residents. Dr. Soutendijk, who will com-
ment now, is Manager of Brown Bros. Harriman
and Company.

Dr. Soutendijk: Not having a company with experi-
ence in the field of technology to discuss, I hope
that you will permit me to make some general re-
marks about the technological gap between Europe
and the United States. I want to limit these remarks
to some economic and financial points which might
contribute to a discussion later.

Nature of the U.S. — Europe Gap

I have been trying to find out for myself why
there is a gap and what kind of circumstances in the
economic and financial field have contributed to this
gap. Like Mr. Peterson this morning, I came to the
conclusion that technology is done by the large com-
panies. We have figures from the International
Chamber of Commerce, according to which 60 to
90 percent of all the research is done by large firms.
For Holland some rather typical figures have been
developed — 80 percent of the research is done by
companies with more than 1000 employees, and 65
percent of this 80 — or 52 percent of the total — is
even done by five large companies.

Concentration of R & D in Large Firms and
Large Countries

This brings us immediately to the point of con-
centration. Concentration of businesses we see in
Europe at the moment, on a large scale in many
countries. It is stimulated — in the first place — by the
Common Market and— in the second place — by the
governments of different countries.

We all know the case of France, where it is gov-
ernment policy to stimulate concentration. We have
seen a report about it from the German Govern-

ment. We have seen a similar "White Paper" from
the Dutch Government and another from the Com-
mon Market Commission.*

This concentration in Europe is in full swing and
will, after some time, show results as far as technol-
ogy is concerned. I have to make the restriction that
so far it is only done on a national basis. We don't
see concentration of businesses in different countries
as yet, and so there is still much to be desired. But
it is a step in the right direction, hopefully leading to
a smaller "Imbalance of Technology" between the
United States and Europe.

Need for Larger Markets

The next thing that is needed in Europe is larger
markets. Here, something is being done already. The
duties in the Common Market and the duties be-
tween the EFTA countries have been brought down
to a large extent, but there are still other barriers, as
the negotiators in Geneva, for the Kennedy Round,
have experienced.

Although some measures have been taken, there
is still a long way to go before Europe will be as
large a market as the United States is.

Need for Capital

Another point is that there is capital required. In
order to acquire the technology which the United
States has, Europe can buy it or it can develop tech-
nology itself. Developing it is ordinarily more expen-
sive than buying. Also, you don't have the risk of
mistakes when you buy it, and it is probably a sim-
pler way, but it requires capital.

Here we come to the strange phenomenon that in
Europe there is enough savings — we have seen be-
fore the Interest Equalization Tax that most of the
European issues floated in New York were bought
by European capital. We have also seen, as reported
in a recent publication of the Atlantic Institute in
Paris, that there is a remarkable balance in amounts
invested by Europe in the United States as com-
pared to the amounts invested by the United States
in Europe. But there is a difference in composition;
European investments in the United States are most-

* References —
Bericht ueber das Ergebnis einer Untersuchung der Konzentration
in der Wirtschaft.

Sent by Chancellor Ludwig Erhard to the President of the German
Bundestag on June 5, 1966.

Enige Gegevens over de Concentratietendens in het Bedrijfsleven.
Sent by State Secretary J. H. Bakker to the President of the
Netherlands Tweede Kamer der Staten-Generaal on January 7,
1966.

Le Probleme de la Concentration dans le Marche' Commun.
Prepared by the EEC Commission, Brussels, December 1, 1965.

138

L. R. W. SOUTENDIJK is Manager of Brown Brothers Harriman & Company,
commercial banking, investment counsel and brokerage firm of New York. From
1946 to 1959 he served as Financial Counselor to the Netherlands Embassy in
Washington.

Dr. Soutendijk was educated at the Rotterdam School of Economics, from
which he received his Doctorate in Economics.

Dr. Soutendijk is currently President of the Netherlands Chamber of Commerce
in the United States and Vice President of the Netherland- America Foundation.
He has served as a member of the Netherlands Delegations to the Reparations
Conference in Paris in 1945 and to the inaugural meeting of the International
Bank for Reconstruction and Development and the International Monetary Fund
in Savannah, Georgia in 1946. In 1945 and 1946 he was Secretary, Economic and
Financial Division of the Netherlands Military Mission. He was alternate Executive
Director of the International Bank for Reconstruction and Development during the
period 1952 to 1954.

256-707 0-67— 10

ly portfolio investments; American investments in
Europe are mostly direct investments, bringing
ideas, techniques and processes to Europe. So even
when there are sufficient savings in Europe these are
not directed to improve technology.

Need for More Coordinated Capital Markets

This brings me to capital markets. The study of
the Atlantic Institute mentioned that there are a
number of shortcomings as far as the capital markets
in Europe is concerned; of these the separation of
the different national capital markets is a most im-
portant one.

We should have — there should be — a European
capital market, and to promote this there should be
a harmonization of law and taxes in general. The
Common Market Commission is moving in this di-
rection but, also here, there still is a long way to go.

There is a kind of transfer of know-how in con-
nection with capital markets, and I might point out
that the World Bank has for years been trying to
assist in the development of capital markets in the
developing countries. I might also point out in this
respect that American banks have been going and
are still going to establish themselves in Europe, in
one form or another; this definitely will contribute
to the foundation of capital markets over there. And
in the third place I want to mention that a large
American chemical company has taken an interest
in a Dutch bank, a couple of years ago, in order to
participate in the European money market, and has
recently established a bank in Zurich to be active in
the European capital market. So there is some
transfer of know-how in the field of capital markets.

Old Attitudes About Exports of Technology &
Capital

I would like to touch on the attitude which the
different countries can take with regard to interna-

tional investments. We have not too long ago, and I
think it was Mr. Cooper who mentioned it yester-
day, seen that there was a time that countries didn't
want to export capital, they didn't want to export
technology. A very interesting article in the Federal
Reserve Bulletin in 1950 quoted a German publica-
tion of 1907, under the title, "Is Export of Machin-
ery Economic Suicide"?

When we look at the United States as the major
country that is supplying technology, we can state
that here there is no concern in this respect what-
soever. The United States never has had any objec-
tion against these exports and the United States
doesn't have to. The article in the Federal Reserve
publication gives as explanation the composition of
the United States exports, which are not endangered
by industrialization since U.S. export articles are
geared to increase production or are required by an
expanding consumption. And the same goes for the
industrial raw materials exported by the United
States. In this connection we should remember the
well-known fact that industrial countries are usually
each others' best customers.

This brings me to the attitude which the receiving
countries have towards foreign investments. We
have seen some remarkable changes. We have seen
for instance, the French government opening an
office in Paris in 1959 to attract American invest-
ments and closing this office in 1964. France is now
more interested in exporting capital to the United
States than in attracting capital to France, except
when it is connected with technology, with the
transfer of technology, or with research in France
itself.

In view of the late hour, I shall limit my remarks
to this. Maybe we will have an opportunity to come
back to these issues in the future.

140

Professor Chenery: The third discussant is both a
scientist and a manager of a technology-based enter-
prise. Dr. Knoppers is President of Merck, Sharp
and Dohme International.

Dr. Knoppers: As a closing speaker I am in a some-
what difficult position because everything that I
wanted to say has been said, and — even worse — it
has been said better than I could do it.

The Key Element: Superior Management

I am very grateful that I had three industrial
speakers before me who stressed the point which
has been made to this conference since the opening
remarks of Secretary Connor until now. We see
clearly again that their three companies were suc-
cessful because they had superior management
which created the technology they wanted, and this
inter-action between management and technology,
with its feedback, is essential for technological
progress.

The story of Merck in this field started in the
early 30's. The late Mr. George Merck, president of
the firm, was dissatisfied with the progress of phar-
maceutical developments. The industry couldn't at-
tract the right people of imagination and capability,
so he made a management decision. He asked the
advice of some of his friends outside the industry.
This was something which Mr. Petersen alluded to
this morning when he talked about cross-fertiliza-
tion. A modern industrial manager must understand
other fields of life: government, economics and
science. Mr. Merck consulted several outstanding
scientists and he spoke to presidents of universities.
And as a management decision, again, his company
created laboratories in which basic research was
combined with objective, directed research with a
broad latitude of freedom. The tradition of Mr.
Merck has been followed up and expanded by his
successors, and I think this approach is the real
source of the success of innovation in drugs by an
American company.

Indeed, I believe deeply that the broadening of
the attitude of management towards technological
development is essential. And I can possibly feel it a
little more acutely because I'm a product of two
worlds, one in which interplay between industry and
science is utilized fruitfully and an older world
where this is less often true. Yet I think we would
do well to ask ourselves where the basic differences
in attitudes lie.

Willingness to Exchange Experiences

The first difference is that American management
stimulates a freer exchange of experiences, and a
freer exchange of experiences means competition. If
you hear how others do it and how well they do it,
you want to do it as well, or better.

Looking for Uses for Scientific Findings

The second difference, I think, is that in the Unit-
ed States the drive of management to find applica-
tions for basic findings is fierce — I sometimes call it
ferocious. It's the habit of thinking immediately and
eagerly: "What can I do with basic findings? What
basic needs can I fill with them?" In my own field,
the pharmaceutical field, the British biologists and
pharmacologists had a complete lead in the physiol-
ogy of nerve transmission, a very essential part of
physiology, with great clinical implications. But it
became such an obsession in many of their universi-
ties they forgot to develop a satisfactory number of
application-minded pharmacologists.

Providing Management Talent in Depth

The third difference in my opinion is that, except
on the higher level, the level of Dr. Peccei and
others in Europe, there is a management gap. In the
United States there are many more good research
directors, both in the giant companies and among
smaller competitors. And, I think, here is a chal-
lenge for Europe to improve its performance. I
think that from the management point-of-view,
Europeans generally should give more attention to
application and they should really try to develop
better professional long-range planning, both in
function and the development of people. One appli-
cation of this attitude was referred to this morning
by Mr. Peterson, when he spoke about those small
companies, the entrepreneurs, that come up and
really are pioneers for the big companies. The
leaders must keep completely awake because they
could be overtaken at any time by competitors with
new concepts.

141

ANTONIE T. KNOPPERS is President of Merck, Sharp & Dohme International, a
world wide manufacturer of pharmaceuticals and chemicals. From 1950 to 1952
he was Professor of Pharmacology at the Free University of Amsterdam, following
which he was appointed Manager of Medical Services in the international opera-
tions of Merck and then Director of Medical Services for Merck, Sharp & Dohme
International. He became Director of Scientific Activities for that division in 1955
and the same year assumed the Vice Presidency and General Management. He
assumed his present position in 1957.

A native of the Netherlands and now a citizen of the United States, Dr. Knop-
pers received his Doctor of Medicine degree from the University of Amsterdam
and his Doctor of Pharmacology from the University of Leyden.

Dr. Knoppers has authored some 60 scientific papers in the fields' of pharmacol-
ogy and endocrinology .

Rewards for the Entrepreneurs

I think that Europe could improve its perform-
ance with better tax laws. We complain about the
tax laws for our entrepreneurs. But in some Euro-
pean countries, if an entrepreneur would put his
capital to risk and make a million dollars, he would
lose virtually all in taxes, then or later. For instance,
Great Britain has not followed through with re-
search and development although it has had the ini-
tiative in many technological basic ideas — vertical
aircraft, to mention one example. A country that
does not reward its entrepreneurs — entrepreneurs
that dare to take risks — is in trouble technologically.

Using a Technological Advantage on a World-
Wide Basis

And another possibility is the one that Dr. Peccei
mentioned. This is the role, the "world-wide" atti-
tude, of firms such as IBM, Olivetti, Xerox, Merck
— I mention only those who stand here on the plat-
form. They establish themselves everywhere. Theirs
is an example of a management attitude that re-
mains enormously important. I would venture a
suggestion: in the pharmaceutical field our main
competitors are three or four big firms based in
Switzerland, a small country. So the question of
home-country size doesn't play a crucial role, if the
company specializes, invests and reinvests in re-
search and above all has a world-wide approach.

The Positive Values of a Technological Gap

I feel that basically it is in the interest of the
United States that we maintain a technological ad-
vantage: that we transfer more technology out than
we take in. This protects the balance of payments
and contributes to the balance of trade. Through
payments made for licenses and royalties, and
through exports of technologically advanced prod-
ucts, a vital contribution is made.

Therefore, I feel that the technology-based
American companies should be good traders; they
should really use their technology to earn money for
this country.

Although I'm thoroughly prepared to be sympa-
thetic with the general aims of the Italian (Fanfani)
plan, especially since it recognizes the need for bet-
ter technology, I would be very much against weak-
ening our attitude to the exploitation of technology
without sound payment. I'm simply surprised at the
suggestion that United States government research
and government technology should be given freely
to Europe at the moment we are in some difficulties

with the balance of payments. To give away the tax-
payers' money — as represented in the value of gov-
ernment patents — to European countries which are
affluent, would, I think, be the opposite of wisdom.

While I consider it useful, on the one hand, that
there is a gap, I am convinced that the gap must
remain manageable (and there I am very sympathet-
ic to the ideas of Dr. Peccei). Should the gap be-
come unmanageable, it could lead to a chain reac-
tion of undesirable consequences. It could make
technology too expensive for Europe to buy; it could
create protectionism, and it could encourage curtail-
ing of direct investment — all of which runs counter
to our nation's need, which is a Europe where we
can sell to an affluent, sophisticated society. And it
would be against the interest of Western Europe it-
self, as it is a move backwards. But, as I said, I
don't think we have reached this unmanageable
stage yet, and Europe has been alerted.

Technology for the Developing Countries: Can
We Help?

I see the problem of technology in less developed
countries in a different way. It is quite clear to me,
especially after what we heard from Professor Rao
and Dr. Rahman, that this problem is not solvable
with the present means. Still, we have it in our
hands, I think, through technology, to solve prob-
lems of underdeveloped countries; the methods to
apply this technology with maximum effectiveness
are yet to be found. A very broad systems approach
could be the theoretical solution. But political and
emotional problems within less developed countries
hamper the implementation. It is a problem of ma-
jor magnitude!

Dr. Seitz yesterday referred to man in terms of
his evolution as a user of tools: homo faber. It
seems that we face some difficulties in finding out
how we can use our present tools — not only in the
problems less developed countries have, such as
population control, food supply, et cetera, but with
our own problems as well (air pollution, slums
et cetera). We have to ask ourselves whether man is
equipped in the evolutionary process to handle those
tools with wisdom. It means, negatively, can we con-
trol our emotions, can we harness our aggressions
and territorial compulsions? Positively, will we men
be wise?

In other words is this technical man a homo sap-
iens? That's possibly the question.
Professor Chenery: Thank you, we now conclude
this part of the Symposium.

143

CLOSING REMARKS

Secretary Connor: What has happened here in these
two days indicates the complexity of the relation be-
tween technology and international trade, the com-
plexity of the problems attendant upon the transfer
of technology from one country to another, from
one industry to another, from one company to
another, from one government institution to another.

Our friends on the platform and in the audience
have delineated some of these problems, particularly
as applied to the transfer of technology from devel-
oped nations to underdeveloped nations. We now
have to break down the general problem into its var-
ious component parts. The problems attendant upon
the transfer of technology from an agency of the
United States Government to a private firm in Mexi-
co are obviously different from the problems that
are associated with the transfer of technology from
Olivetti, in Italy, to Olivetti-Underwood in the United
States. The reverse follows. It is also different in
a situation involving a private firm in the United
States with a competing firm in Great Britain.

The problem of competition needs to be stressed
somewhat more than it was during the formal pro-

gram. In our system, after developing new technol-
ogy using stockholder money, it just isn't feasible
for a corporation to give that away without ade-
quate consideration. The adequacy of the considera-
tion can vary from case to case, but there must be
some return on the technology that represents an
investment of stockholders' money. Then, the point
made about the transfer of technology developed
in the public domain, involves quite a few special
problems. Most of that technology gets into the
literature and is available to the public on a world-
wide basis. However, the actual transfer of the
know-how involved requires additional expense for
travel of skilled people, for example; this additional
cost might have to be justified to the Appropriations
Committees, as one example.

This symposium, in many respects, has been an
eye-opener, certainly for me and perhaps for some
of you. For one thing, I have a completely broad-
ened view of the question of the "technological
gap." The fact that so many people have talked
about the differences in the managerial competences,
attitudes and techniques is of considerable impor-
tance. We are left with the conclusion that an
important element in the so-called technological gap
consists of what could be called a managerial gap,
and this is surely something that would have to be
given more attention in the future. In the discussion
this afternoon, we get on the question of the gap in
capital resources; in any further consideration of
this problem, this element has to be explored in
greater detail than it has heretofore.

In thinking about what has transpired, I come up
with an analogy. It seems to me that we can view
technology as a vehicle of progress, with managerial
skills in the driver's seat, incentives as the fuel, and
the road paved with capital resources. These are
certainly the important elements and make me come
back with renewed emphasis to the importance of
the management factor. If the management of tech-
nology is as important as stated in this two-day ses-
sion, then we should take definite steps in all the
countries to do something about the lack of trained,
highly motivated people with managerial skills, who
are willing to try to make technology work for the
benefit of mankind. That is the final thought that I
would like to leave with you, because that is really
the objective of our endeavors — to improve the con-
dition of mankind. Thank you all, very much.

144

List of

Participants

in the Symposium

Ibrahim Helmi Abdel-Rahman

Harry C. Anderson, President

Commissioner for Industrial Development

Business Equipment Manufacturers Assn.

United Nations

New York, N.Y.

New York, N.Y.

Rolf Andreasson

Colonel William M. Adams, President

Scientific Attache

Sprague International Ltd.

Embassy of Sweden

North Adams, Mass.

Washington, D.C.
W. E. Andrus, Jr.

Azmi Ahmed Afifi, Chief

Group Director of Standards

Industrial Institution Section

IBM Corporation
Armonk, N.Y.

Center for Industrial Development

United Nations

New York, N.Y.

M. D. Archangeli
Director of Planning

William H. Aiken

Eaton Yale and Towne Inc.

Vice President for Research & Development

Detroit, Mich.

Union-Bag Camp Paper Corporation

New York, N.Y.

Dr. George T. Armstrong
National Bureau of Standards

Samuel N. Alexander

Washington, D.C.

National Bureau of Standards

Washington, D.C.

H. C. Armstrong
Embassy of Canada
Washington, D.C.

D. Jaime MacVeigh Alfos, Vice President

Tecnatom, S.A.

Madrid, Spain

Dr. Allen V. Astin, Director

National Bureau of Standards

Washington, D.C.

Dr. Harry Allen, Jr.

Bureau of Mines, Dept. of Interior

L. A. Atwell

Washington, D.C.

National Aeronautics & Space Administration
Washington, D.C.

Dr. Franz L. Alt

National Bureau of Standards

George E. Auman

Washington, D.C.

National Bureau of Standards
Washington, D.C.

Dr. Ernest Ambler

National Bureau of Standards

Dr. Walter Baei

Washington, D.C.

Office of the Vice President
The White House
Washington, D.C.

William G. Amey

Leeds & Northrup Company

Henri Bader, Scientific Attache

Philadelphia, Pa.

Department of State
Washington, D.C.

Dr. Costas E. Anagnostopoulos

Director of Research, Organic Chemicals Division

Dr. W. O. Baker, Vice President

Monsanto Chemical Company

Bell Telephone Laboratories

St. Louis, Mo.

Murray Hill, N.J.

14!

A

Dr. Lajos Banlaki
Deputy Commercial Counselor
Hungarian Legation
Washington, D.C.

Donald W. Banner
General Patent Counsel
Borg-Warner Corporation
Chicago, 111.

Jenaro Baquero
Secretary of Commerce
Commonwealth of Puerto Rico
Santurce, P.R.

Henry Barbour
Congressional Hotel
Washington, D.C.

Harry H. Bell

U. N. Conference on Trade & Development

Geneva, Switzerland

Reynold Bennett

Director of Science & Technology
National Association of Manufacturers
Washington, D.C.

Milton A. Berger

Bureau of International Commerce
Department of Commerce
Washington, D.C.

Dr. loseph S. Berliner
Department of Economics
Brandeis University
Waltham, Mass.

Saul Baron

Bureau of International Commerce
Department of Commerce
Washington, D.C.

Alfred W. Barth
Executive Vice President
The Chase Manhattan Bank
New York, N.Y.

Dr. A. Allan Bates

National Bureau of Standards

Washington, D.C.

Joseph W. Barr
Under Secretary
Department of the Treasury
Washington, D.C.

Norman E. Bateson, Vice President
Pullman-Standard Division
Pullman Incorporated
Chicago, 111.

Dr. Charles W. Beckett
National Bureau of Standards
Washington, D.C.

David Z. Beckler

Technical Assistant to the Director
Office of Science & Technology
Washington, D.C.

George E. Beggs, Jr., President
Leeds & Northrup Company
Philadelphia, Pa.

Samir K. Bhatia
World Bank
Washington, D.C.

Dr. Bruce H. Billings
Vice President
Aerospace Corporation
Los Angeles, California

Bascom W. Birmingham
National Bureau of Standards
Boulder, Colorado

Slator Blackiston, Jr.
American Embassy
Cairo, U. A. R.

Dr. Edward Blum

Department of Chemical Engineering

Princeton University

Princeton, N.J.

Dr. Marcello Boldrini, President
Ente Nazionale Idrocarburi
Rome, Italy

Dr. C. F. Bona, Director
Central Research Laboratories
FIAT
Torino, Italy

Rod Borum, Administrator. .

Business & Defense Services Administration

Department of Commerce

Washington, D.C.

Dr. S. J. Begun, Vice President
Clevite Corporation
Cleveland, Ohio

R. M. Boudeman, Vice President
The UpJohn Company
Kalamazoo, Michigan

146

Pierre Bourguignon

Special Advisor to the President

Commission of the European Economic Community

Brussels, Belgium

Dean Bowman

Autonetics Division

North American Aviation, Inc.

Anaheim, Calif.

Eugene M. Braderman

Deputy Assistant Secretary

Commercial Affairs & Business Activities

Department of State

Washington, D.C.

Dr. Edward L. Brady
National Bureau of Standards
Washington, D.C.

G. E. Branscomb, President
Systems Development Division
IBM Corporation
White Plains, N.Y.

Dr. Lewis E. Branscomb
National Bureau of Standards
Boulder, Colorado

Edward J. Brenner
Commissioner of Patents
Patent Office

Department of Commerce
Washington, D.C.

Dr. F. Cecil Brenner
National Bureau of Standards
Washington, D.C.

Leonard M. Brenner
Atomic Energy Commission
Germantown, Md.

Dr. Robert Brenner

Special Asst. to the Under Secretary for Transportation

Department of Commerce

Washington, D.C.

Dr. Andrew F. Brimmer
Federal Reserve System
Washington, D.C.

Dr. Alfred Brown, President
Celanese Research Company
Summit, N.J.

Dr. S. H. Browne

Lockheed Aircraft Corporation

Washington, D.C.

Corwin Brumley, Vice President
Bausch & Lomb, Inc.
Rochester, N.Y.

Meade Brunet, Vice President
Radio Corporation of America
Mendham, N.J.

Stanley Buckland
Control Data Corporation
Rockville, Md.

Robert F. Burnett
6322 Alberta Street
Springfield, Va.

Dr. Alis J. Buselli, Vice President
Research and Technology
Mobil Oil Corporation
New York, N.Y.

Edward A. Butler
Maritime Administration
Department of Commerce
Washington, D.C.

J. A. Caffiaux, Manager
Engineering Department
Electronic Industries Association
Washington, D.C.

Julius Cahn

Assistant to the Vice President
The White House
Washington, D.C.

Philip A. Calabrese

Environmental Science Services Administration

Department of Commerce

Rockville, Md.

Dr. Edward W. Cannon
National Bureau of Standards
Washington, D.C.

Dr. William M. Capron
Brookings Institution
Washington, D.C.

E. Finley Carter

Consultant, Stanford Research Institute

Portola Valley, Calif.

Professor H. B. G. Casimir
Director of Research Laboratories
N. V. Philips Industries
Eindhoven, The Netherlands

Leo Castaldi

IBM World Trade Corporation

Washington, D.C.

Tomas Chavarri

First Secretary, Economic Affairs
Spanish Embassy
Washington, D.C.

147

Professor Hollis B. Chenery
Department of Economics
Harvard University
Cambridge, Mass.

James F. Collins

Deputy Assistant Secretary for Domestic Business Policy

Department of Commerce

Washington, D.C.

R. H. Cherry

Director of Research & Development
Research & Development Center
North Wales, Pa.

Harry E. Chesebrough, President
USA Standards Institute
New York, N.Y.

Dr. Herman I. Chinn
American Embassy
Tehran, Iran

Gordon Christenson
Asst. General Counsel
Department of Commerce
Washington. D.C.

Walter A. Chudsen

Center for Industrial Development

United Nations

New York, N.Y.

Llewellyn Clague
Business International
New York, N.Y.

Dr. Amando Clemente

National Research Council of the Philippines

University of the Philippines

Quezon City, Philippines

V. Clermont

Director General

Association Francaise de Normalisation

Paris, France

Dayton H. Clewell, Senior Vice President
Mobil Oil Corporation
New York, N.Y.

Dr. Norman D. Coggeshall

Gulf Research & Development Company

Pittsburgh, Pa.

Dr. Gerhard Colm

National Planning Association

Washington, D.C.

Dr. E. U. Condon
Department of Physics
University of Colorado
Boulder, Colorado

John T. Connor
Secretary of Commerce
Washington, D.C.

Dr. Richard K. Cook

Environmental Science Services Administration

Department of Commerce

Rockville, Md.

Dr. Denis A. Cooper

Small Business Administration

Washington, D.C.

Professor Richard N. Cooper
Department of Economics
Yale University
New Haven, Conn.

P. Willard Crane, Vice President
The Cincinnati Milling Machine Co.
Cincinnati, Ohio

Dr. Paul C. Cross, President
Mellon Institute
Pittsburgh, Pa.

A. A. dimming
Chairman of the Board
Union Carbide Canada Ltd.
Toronto, Canada

Robert F. Dale
509 Beaumont Road
Silver Spring, Md.

Earl C. Daum, General Manager

General Motors Overseas Operations Division

New York, N.Y.

Nathan Cohn

Vice President for Technical Affairs
Leeds & Northrup Company
Philadelphia, Pa.

Dr. Henry David, Head
Office of Science Research Planning
National Science Foundation
Washington, D.C.

Thomas P. Collier

Thomas Collier & Associates

Los Angeles, Calif.

William R. Davies
Worthington Corporation
Washington, D.C.

148

John V. Deaver, Vice President
Economic Research
The Chase Manhattan Bank
New York, N.Y.

Peter R. DeBruyn

National Bureau of Standards

Washington, D.C.

Wilfred F. Declercq
American Embassy
Belgrade, Yugoslavia

Dr. Paulo De Goes
Science Attache
Brazilian Embassy
Washington, D.C.

Dr. Peter T. Demos

Massachusetts Institute of Technology

Cambridge, Mass.

Charley M. Denton

Business & Defense Services Administration

Department of Commerce

Washington, D.C.

Daniel V. DeSimone
National Bureau of Standards
Washington, D.C.

Dr. John H. Dessauer, Vice President
Xerox Corporation
Rochester, N.Y.

Edward W. Doherty
Policy Planning Council
Department of State
Washington, D.C.

Robert B. Dollison
Department of Commerce
Washington, D.C.

Myron G. Domsitz

National Bureau of Standards

Washington, D.C.

Hugh Donaghue
Assistant to the President
Control Data Corporation
Rockville, Md.

Walter Dowling, Director General
The Atlantic Institute
Boulogne-sur-Seine, France

Carroll Downey

Business & Defense Services Administration

Department of Commerce

Washington, D.C.

Alan Drew, President, International Marketing
Friden Inc.
New York, N.Y.

Miss Maryanne Dulansey
Office of the Foreign Secretary
National Academy of Sciences
Washington, D.C.

John P. Eberhard, Director
Institute for Applied Technology
National Bureau of Standards
Washington, D.C.

F. W. Edwards

Vice President, International Marketing
Standard Kollsman Industries
Melrose Park, 111.

Dr. Churchill Eisenhart
National Bureau of Standards
Washington, D.C.

Julian Engel

Office of the Foreign Secretary
National Academy of Sciences —
National Research Council
Washington, D.C.

Dr. Elmer Engstrom, President
Radio Corporation of America
New York, N.Y.

Fred C. Ewert
Deere & Company
Moline, 111.

B. Eyal-Josyk
Embassy of Israel
Washington, D.C.

Allen J. Farrar

National Bureau of Standards

Washington, D.C.

Mark C. Feer

Deputy Assistant Secretary for Financial Policy

Department of State

Washington, D.C.

Dr. Robert E. Ferguson
National Bureau of Standards
Washington, D.C.

Georges Feme

O.E.C.D. Fellow

c/o National Science Foundation

Washington, D.C.

149

Irwin Fine

Bureau of International Commerce
Department of Commerce
Washington, D.C.

Dr. Edwin A. Gee

Director of Development Department
E. I. du Pont de Nemours & Co., Inc.
Wilmington, Delaware

Leslie S. Fletcher

American Society of Tool & Mfg. Engineers

Dearborn, Mich.

Mrs. Frances M. Geiger
National Planning Association
Washington, D.C.

Dr. Rene Foch

Director of External Relations

EURATOM

Brussels, Belgium

J. Mishell George
Bureau of International Commerce
Department of Commerce
Washington, D.C.

G. A. Fowles

Vice President, Marketing

B. F. Goodrich Chemical Company

Cleveland, Ohio

Francis J. Gleason

Vice President, International Operations

Schering Corporation

Bloomfield, N.J.

Dr. Daniel Frerejacque
Scientific Attache
Embassy of France
Washington, D.C.

Seymour S. Goodman
INR/RES

Department of State
Washington, D.C.

Dr. Franz Froschmaier
European Economic Community
Washington, D.C.

Dr. George S. Gordon
National Bureau of Standards
Washington, D.C.

Arnold W. Fruitkin

Asst. Administrator, International Affairs
National Aeronautics & Space Administration
Washington, D.C.

G. S. Gouri

Center for Industrial Development

United Nations

New York, N.Y.

Bernard M. Fry

National Bureau of Standards

Washington, D.C.

Dr. Donald L. Fuller
American Embassy
New Delhi, India

Dr. Herbert Fusfeld
Research Director
Kennecott Copper Corporation
New York, N.Y.

Harold Graham

Pan American World Airways, Inc.

New York, N.Y.

Hylton Graham

National Bureau of Standards

Washington, D.C.

R. E. Graham, Executive Vice President

Owens-Illinois

Toledo, Ohio

Sydney R. Gaarder
Atomic Energy Commission
Germantown, Md.

Dr. Oswald H. Ganley

International Scientific & Technical Affairs

Department of State

Washington, D.C.

Arthur Garel

Business & Defense Services Administration

Department of Commerce

Washington, D.C.

Nils L. Gram
Scientific Attache
Embassy of Norway
Washington, D.C.

James A. Gray, Executive Vice President
National Machine Tool Buildings Assn.
Washington, D.C.

Dr. Melville E. Green
National Bureau of Standards
Washington, D.C.

150

Martin Greenspan

National Bureau of Standards

Washington, D.C.

John C. Griffith

Office of International Economic & Social Affairs

Department of State

Washington, D.C.

N. K. Grigoriev, Director
Technological Division,

Centre for Industrial Development
United Nations
New York, N.Y.

Ze'ev Grodecki, President

Israel-America Chamber of Commerce and Industry Ltd.

Tel-Aviv, Israel

Paul J. Grogan, Director
Office of State Technical Services
Department of Commerce
Washington, D.C.

K. A. Anker Hansen
Scientific Counselor
Embassy of Denmark
Washington, D.C.

Robert D. Harrington
122 Calvert Road
Rockville, Md.

Dr. Milton Harris
3300 Whitehaven Street
Washington, D.C.

S. T. Harris, Vice President
Texas Instruments, Inc.
Dallas, Texas

Dr. William J. Harris
Assistant to the Vice President
Battelle Memorial Institute
Washington, D.C.

G. M. Hartley, Managing Director
Cooper Development Association
New York, N.Y.

Elmer S. Groo, Vice President
IBM World Trade Corporation
New York, N.Y.

William Hartley
Science Attache
Australian Embassy
Washington, D.C.

A. C. Grove

USA Standards Institute

New York, N.Y.

A. Hass

Schering Corporation

Bloomfield, N.J.

Louis Groven
Scientific Counselor
Embassy of Belgium
Washington, D.C.

Sanjivi Guhan
First Secretary of Economics
Indian Embassy
Washington, D.C.

Fayvel Hadass, Director

The Standards Institution of Israel

Tel-Aviv, Israel

Jerrier A. Haddad, Director

of Technology of Engineering Systems
International Business Machines Corp.
Armonk, N.Y.

Walter Hahn

Environmental Science Services Admin.
Department of Commerce
Rockville, Md.

George T. Hayes

Assistant Manager-Development

Bechtel Corporation

San Francisco, Calif.

H. E. Heilman

Vice President-International

B. F. Goodrich

Akron, Ohio

J. M. Heldack

North American Aviation, Inc.

El Segundo, Calif.

George Herbert, President
Research Triangle Institute
Research Triangle Park, N.C.

M. P. Hershey, Technical Director
Firestone Tire & Rubber Company
Akron, Ohio

R. D. Higgins

Bell & Howell Company

Chicago, Illinois

151

John Hight, Executive Director
Committee for a National Trade Policy
Washington, DC.

John Hill

Office of Atlantic Political Affairs
Department of State
Washington, D.C.

Dr. James Hillier, Vice President
RCA Laboratories
David Sarnoff Research Center
Princeton, N.J.

Walter R. Hinchman

Office of Telecommunications Management
Executive Office of the President
Washington, D.C.

W. C. Hittinger

Bell Communications, Inc.

Washington, D.C.

Dr. Robert B. Hobbs
National Bureau of Standards
Washington, D.C.

Dr. C. A. J. Hoeve

National Bureau of Standards
Washington. D.C.

Miss Vada Horsch

Program & Policy Executive, International Affairs

Department
National Association of Manufacturers
New York, N.Y.

Dr. L. E. Howlett

Director, Division of Applied Physics
National Research Council
Ottawa, Ontario, Canada

Dr. Ralph P. Hudson
National Bureau of Standards
Washington, D.C.

Commander Wesley V. Hull
Environmental Science Services Administration
Department of Commerce
Rockville, Md.

James K. Huntoon

Environmental Science Services Administration

Department of Commerce

Rockville, Md.

Dr. Robert D. Huntoon, Director
Institute for Basic Standards
National Bureau of Standards
Washington, D.C.

Frank N. Hoffman

United Steelworkers of America

Washington. D.C.

Dr. John D. Hoffman
National Bureau of Standards
Washington, D.C.

E. S. Hogland, Chairman

National Foreign Trade Council, Inc.

New York, N.Y.

Dr. J. Herbert Hollomon

Assistant Secretary for Science & Technology

Department of Commerce

Washington, D.C.

Albert Louis Horley
1845 Harvard Street N.W.
Washington, D.C.

Dr. Donald F. Hornig

Special Assistant to the President for Science

and Technology
The White House
Washington, D.C.

Morton Hyman

International Business Machines Corp.

Gaithersburg, Md.

Dr. Horace S. Isbell

National Bureau of Standards

Washington, D.C.

F. H. Jabos

International Economic Policy Association

Washington, D.C.

Dr. Christian Jacobaeus

Executive Vice President for Technique

L. M. Ericsson

Stockholm, Sweden

S. C. Jem, Vice President
Chinese Petroleum Corporation
New York, N.Y.

Malcolm W. Jensen
National Bureau of Standards
Washington, D.C.

Dr. Emanuel Horowitz
National Bureau of Standards
Washington, D.C.

Dr. Everett R. Johnson
National Bureau of Standards
Washington, D.C.

152

Harry W. Jones

Vice President and Assistant to the President
Westinghouse Electric International Co.
New York, N.Y.

Robert T. Jones

Vice President, Autonetics Division
North American Aviation, Inc.
Anaheim, Calif.

Dr. Deane B. Judd

National Bureau of Standards

Washington, D.C.

Leonard Kamsky, Head
Business Economics Department
W. R. Grace & Co.
New York, N.Y.

Morris Kaplan, Technical Director
Consumers Union
Mount Vernon, N.Y.

Atilia Karaosmanoglu, Economist
World Bank
Washington, D.C.

Walter Katchnig

Deputy Assistant Secretary for International Organizations

Department of State

Washington, D.C.

Jacob E. Katz

Business & Defense Services Administration

Department of Commerce

Washington, D.C.

Dr. Gordon Kline
331 So. Palmway
Lake Worth, Florida

Dr. Antonie Knoppers, President
Merck Sharp & Dohme International
New York, N.Y.

William T. Knox

Office of Science & Technology

Washington, D.C.

Dr. H. William Koch
National Bureau of Standards
Washington, D.C.

K. L. Kollar

Business & Defense Services Administration

Department of Commerce

Washington, D.C.

Paul H. Kratz

National Bureau of Standtrds

Washington, D.C.

Louis C. Krauthoff

Office of the Special Representative for

Trade Negotiations
Washington, D.C.

Richard T. Kropf, President
Belding Hemingway Company, Inc.
New York, N.Y.

Dr. Juergen Kuczynski
German Academy of Science
West Berlin, Germany

Michael G. Kelakos
American Embassy
Tel-Aviv, Israel

Miss Barbara M. Kugel, Adviser
Economic & Social Affairs
U. S. Mission to the United Nations
New York, N.Y.

Dr. M. Kersten, President
Physikalisch-Technische Bundesanstalt
Braunschweig, Germany

Dr. Lawrence M. Kushner
National Bureau of Standards
Washington, D.C.

Dr. Karl G. Kessler
National Bureau of Standards
Washington, D.C.

Ralph A. Lamm
Bendix Corporation
North Hollywood, Calif.

I. S. Khranston
Soviet Embassy
Washington, D.C.

Francis L. LaQue, Vice President
International Nickel Company
New York, N.Y.

Edward R. Killam

Business & Defense Services Administration

Department of Commerce

Washington, D.C.

William S. Lawson
Patent Office

Department of Commerce
Washington, D.C.

153

Dr. Cristino Lazatin, Science Attache
Embassy of the Philippines
Washington, DC.

Willis S. MacLeod
Federal Supply Service
Washington, D.C.

Richard S. Leghorn, President
DASA Corporation
Andover, Mass.

P. H. Leman, Executive Vice President
Aluminum Company of Canada Ltd.
Montreal, Quebec, Canada

James Leonard
Bureau of Public Roads
Department of Commerce
Washington, D.C.

Sam L. G. Maggio
Division of Language Services
Department of State
Washington, D.C.

Dr. Robert Major, Director

Royal Norwegian Council for Scientific &

Industrial Research
Oslo, Norway

Dr. Canuto G. Manuel, Commissioner
National Institute of Science & Technology
Manila, Philippines

Bernard M. Levin

National Bureau of Standards

Washington, D.C.

The Rt. Hon. Ernest Marples
Member of Parliament
London, England

Charles A. Lewis

Business & Defense Services Administration

Department of Commerce

Washington, D.C.

Dr. Halvard Liander
Executive Vice President
ASEA
Stockholm. Sweden

Dr. David R. Lide, Jr.
National Bureau of Standards
Washington, D.C.

Robert Liimatainen, Science Attache
Department of State
Washington, D.C.

Walter L. Lingle, Jr.
Executive Vice President
The Procter & Gamble Company
Cincinnati, Ohio

Arnold Lissance, Interpreter
Division of Language Services
Department of State
Washington, D.C.

Varnum D. Ludington
Vice President of Research
General Foods Corporation
White Plains, N.Y.

Dr. Ladislaus L. Marton
National Bureau of Standards
Washington, D.C.

Dr. Oscar Marzke, Vice President
United States Steel Corporation
Pittsburgh, Pa.

Dr. George J. Maslach, Dean
College of Engineering
University of California
Berkeley, Calif.

E. O. Mattocks, Director
Division of Science & Technology
American Petroleum Institute
New York, N.Y.

Mrs. Elizabeth S. May
Export-Import Bank of Washington
Washington, D.C.

Dr. Clyde L. McClelland
American Embassy
Stockholm, Sweden

Dr. R. J. McCubbin

Director of Special Staff Projects, International
Minnesota Mining & Manufacturing Co.
St. Paul, Minn.

Francis K. McCune, Vice President
General Electric Company
New York, N.Y.

W. Stuart Lyman, Managing Director
Cooper Development Association
New York, N.Y.

William Mclnerney

Senate Small Business Committee

Washington, D.C.

54

Harris Mcintosh, President
Toledo Scale Company
Toledo, Ohio

Dr. Oscar Menis

National Bureau of Standards

Washington, DC.

H. McKinley
State Government
Atlanta, Georgia

Miss Joyce McKloskey

Gulf South Research Institute

Washington, D.C.

Professor Marshall McLuhan, Director
Center for Culture & Technology
University of Toronto
Toronto, Canada

Thomas R. McMullen

Business & Defense Services Administration

Department of Commerce

Washington, D.C.

Alvin G. McNish

National Bureau of Standards

Washington, D.C.

Lawrence C. McQuade
Assistant to the Secretary
Department of Commerce
Washington, D.C.

C. J. McQuillan

International Telephone & Telegraph Co.
New York, N.Y.

Thomas W. Mears

National Bureau of Standards

Washington, D.C.

D. A. Meeker, Chairman of the Board
Hobart Manufacturing Company
Troy, Ohio

Dr. W. Wayne Meinke
National Bureau of Standards
Washington, D.C.

Alejandro Melchor, Deputy Director General
Presidential Economic Staff
Office of the President of the Philippines
Manila, Philippines

Edward Melton, Director of D.C. Affairs
Clevite Corporation
Washington, D.C.

Dr. Alan Mencher
American Embassy
London, England

Dr. M. Eugene Merchant
Director of Scientific Research
The Cincinnati Milling Machine Co.
Cincinnati, Ohio

Frank Meya

The Taft-Pierce Mfg. Co.

Woonsocket, R.I.

Rauer H. Meyer

Bureau of International Commerce
Department of Commerce
Washington, D.C.

Rodney W. Meyer, Manager
Components & Products Marketing
Hughes International
Culver City, Calif.

Michael Michaelis, Manager
Arthur D. Little, Inc.
Washington, D.C.

Gene Mikols

Electric Machinery Mfg. Co.

Washington, D.C.

I. J. Minett, Group Vice President
International Operations
Chrysler Corporation
Detroit, Mich.

G. Franklin Montgomery
National Bureau of Standards
Washington, D.C.

Ugo Morabito
Commercial Minister
Italian Embassy
Washington, D. C.

Dr. Richard S. Morse
Alfred P. Sloan School of Management
Massachusetts Institute of Technology
Cambridge, Mass.

Dr. J. A. Morton, Vice President
Bell Telephone Laboratories, Inc.
Murray Hill, N.J.

George B. Mosely, Director
Corporate Marketing
Champion Papers, Inc.
Chicago, 111.

256-707 0-67— 11

155

Miss Mary Moss

Center for Industrial Development

United Nations

New York, N.Y.

Dr. Carl O. Muehlhause
National Bureau of Standards
Washington, D.C.

Howard C. Multer
Stanley Tool Division
Stanley Works
New Britain, Conn.

Costin Murgescu, President

The Academy of the Romanian People's Republic

Bucharest, Romania

Henry Myers, Office of Atlantic Political Affairs
Department of State
Washington, D.C.

Mr. Sumner Myers

National Planning Association

Washington, D.C.

Stanley Nehmer,

Deputy Assistant Secretary for Resources

Department of Commerce

Washington, D.C.

N. D. Neureiter
American Embassy
Bonn, Germany

Dr. Morris Newman
National Bureau of Standards
Washington, D.C.

Nicolae Nicolae

Deputy Minister of Foreign Trade

Bucharest, Romania

Robert M. Norris, President
National Foreign Trade Council.
New York, N.Y.

Inc.

Gerald O'Brien

Assistant Commissioner of Patents

Patent Office

Department of Commerce

Washington, D.C.

Dr. Edward R. O'Connor

Office of Under Secretary of Commerce for Transportation

Department of Commerce

Washington, D.C.

Carl Oechsle

Macon Smith & Company

Springfield, Mass.

B. H. Oehlert

The Coca Cola Export Corp.

New York, N.Y.

Kenneth Olsen, President
Digital Equipment Corp.
Maynard, Mass.

Joseph Oppenheim, Director
Raytheon International
Raytheon Company
Lexington, Mass.

Donald Orr, Vice President, Operations — International

Division, UNIVAC
Sperry Rand Corporation
Philadelphia, Pa.

Dr. Hansjorg Oser

National Bureau of Standards

Washington, D.C.

Nathan Ostroff
Chairman, Appeals Board
Department of Commerce
Washington, D.C.

Dr. Jose M. Otero, President
Junta de Energia Nuclear
Madrid, Spain

James M. Owens

Business & Defense Services Administration

Department of Commerce

Washington, D.C.

Dr. Chester H. Page
National Bureau of Standards
Washington, D.C.

L. Palacios

Centro Nacional de Energia Nuclear

Madrid, Spain

Max Palevsky, President
Scientific Data Systems
Santa Monica, Calif.

A. R. Parsons
Honeywell, Inc.
Minneapolis, Minn.

P. T. O'Day

National Bureau of Standards

Washington, D.C.

Dr. Elio Passaglia

National Bureau of Standards

Washington, D.C.

156

i

Thomas H. Pearce, President
National Standard Company
Niles, Mich.

Robert W. Pearson, Chairman
P-W Industries, Inc.
Philadelphia, Pa.

Dr. Aurelio Peccei, Chief Executive
Ing. C. Olivetti & C, S.p.A.
Ivrea, Italy

Dean Courtland D. Perkins, Chairman
Aeronautical Engineering Dept.
Princeton University
Princeton, N.J.

R. L. Perry, Economics Department
The Rand Corporation
Santa Monica, Calif.

C. M. Peterson

Vice President, Overseas Marketing
John Deere & Company
Moline, Illinois

Peter G. Peterson, President
Bell & Howell Company
Chicago, Illinois

Donald L. Peyton
Managing Director & Secretary
USA Standards Institute
New York, N.Y.

Herman Pollack

Director of International Scientific & Technological Affairs

Department of State

Washington, D.C.

Reuben Pomerantz

Special Assistant to the Assistant Secretary for

Science & Technology
Department of Commerce
Washington, D.C.

Gaston Ponsart
Delegue du Comite Franc
Dollar en Amerique du Nord
Washington, D.C.

Edward Pope, Special Projects Manager
General Foods Corporation
White Plains, N.Y.

Robert C. Powell

National Bureau of Standards

Washington, D.C.

Dr. S. L. Pundsak, Director for Basic Research
Johns-Manville Research & Engineering Center
Manville, N.J.

Dr. Stephen T. Quigley
American Chemical Society
Washington, D.C.

Professor James Bryan Quinn
Dartmouth College
Hanover, N.H.

Christopher Phillips, President

U. S. Council of the International Chamber of Commerce

New York, N.Y.

Jacob Rabinow, President
Rabinow Electronics, Inc.
Rockville, Md.

Professor F. Picard
Director for Research
Regie Nationale Renault
Billancourt/Seine, France

Dr. Emanuel R. Piore, Vice President
International Business Machines Corp.
Armonk, N.Y.

Dr. Edgar L. Piret
American Embassy
Paris, France

Valeri A. Racheyev, Scientific Counselor
Soviet Embassy
Washington, D.C.

Remus Radulet, Vice President
National Council for Scientific Research
Bucharest, Romania

K. S. Sundara Rajan
Minister of Economics
Indian Embassy
Washington, D.C.

Dr. Sergio Pizzoni-Ardemani
Special Assistant to the President
Olivetti-Underwood Corporation
New York, N.Y.

M. G. Raja Ram
Minister, Education and Culture
Indian Embassy
Washington, D.C.

Leon Podolsky

Sprague Electric Company

North Adams, Mass.

Dr. Walter Ramberg
American Embassy
Rome, Italy

157

Professor V. K. R. V. Rao

Member, Planning Commission
Government of India
New Delhi, India

Stephen H. Rogers

European Community & Atlantic Political-Economic Affairs

Department of State

Washington, D.C.

James B. Rather, Jr.
Research Department
Mobil Oil Corporation
New York, N.Y.

Jean-Jacques Rolland
Secretary, Scientific Affairs
Embassy of Switzerland
Washington, D.C.

Hugh L. Ray

Sears Development Laboratories

Chicago, Illinois

Murray Rennert

Bureau of International Commerce
Department of Commerce
Washington, D.C.

Prof. L. Rey, Scientific Adviser
Nestle Alimentana S. A.
Vevey, Switzerland

Dr. Ludwig Rosenstein

Consultant, Tech. & Engineering Chemistry

San Francisco, Calif.

Dr. Henry M. Rosenstock
National Bureau of Standards
Washington, D.C.

Geoffrey Rowe
Standardization Officer
Electrical & Electronic Branch
Department of Industry
Ottawa, Ontario, Canada

John E. Reynolds
Board of Governors
Federal Reserve System
Washington, D.C.

J. W. Richards, Director
Technical Analysis Office
Ford Motor Company
Dearborn, Mich.

Philip Ridley
British Embassy
Washington, D.C.

R. W. Ritzmann

Atomic Energy Commission

Germantown, Md.

Paul H. Robbins, Executive Director
National Society of Professional Engineers
Washington, D.C.

Dr. R. O. Roblin, Vice President
American Cyanamid Company
Wayne, N.J.

Dr. Arthur Roe, Head
Office of International Science Activities
National Science Foundation
Washington, D.C.

M. L. Ruppert, General Secretary
International Electrotechnical Commission
Geneva, Switzerland

James V. Ryan

National Bureau of Standards

Washington, D.C.

L. V. Sabelnikor
Soviet Embassy
Washington, D.C.

Dr. Juan Salcedo, Jr., Chairman

Philippine National Science Development Board

Manila, Philippines

Soedjana M. Sapie

National Bureau of Standards

Washington, D.C.

Dr. Mario Scalera

American Cyanamid Company

Wayne, N.J.

Dr. Reinaldo Scarpetta

Dean, Division of Social & Economic Sciences

Universidad del Valle

Cali, Columbia

R. A. Schatzel

1406 N. George Street

Rome, New York

Dr. Paolo Rogers

Director for International Affairs

Olivetti Company

Rome, Italy

E. E. Schnellbacher, Assistant Director
Bureau of International Commerce
Department of Commerce
Washington, D.C.

158

Dr. I. C. Schoonover
Deputy Director
National Bureau of Standards
Washington, DC.

H. W. Shoemaker
Manager, Technical Information
General Electric Company
Washington, D.C.

Dr. Galen B. Schubauer
National Bureau of Sttndards
Washington, D.C.

Professor Andrew Schultz, Jr.
Dean of Engineering
Cornell University
Ithaca, New York

W. L. K. Schwarz, Industrial Economist
Stanford Research Institute
Washington, D.C.

C. S. Seabring, Vice President for Research & Development
Worthington Corporation
Harrison, N.J.

Francis J. Sehn, President
Press Automation Systems
Detroit, Michigan

Dr. Frederick Seitz, President

National Academy of Sciences — National Research Council

Washington, D.C.

Dr. Giuseppe Sfligiotti
Assistant to the President
Ente Nazionale Idrocarburi
Rome, Italy

C. H. Sharpston, Secretary-General
International Organization for Standardization
Geneva, Switzerland

John F. Shaw

Office of the Special Representative for Trade Negotiations

Washington, D.C.

Dr. Reza Shayegan, Director

Institute of Standards & Industrial Research of Iran-Isiri

Tehran, Iran

Dr. Leonard S. Sheingold, Vice President
Sylvania Electronics Systems
Waltham, Mass.

Dr. Chalmers W. Sherwin, Deputy Assistant Secretary

for Science & Technology
Department of Commerce
Washington, D.C.

Dr. Ronald Gordon Shuttleworth
Scientific Attache
Embassy of South Africa
Washington, D.C.

Clarence S. Siegel, Deputy Director
Office of International Regional Economics
Department of Commerce
Washington, D.C.

Alessandro Silj
Harvard University
Cambridge, Mass.

Dr. Shirleigh Silverman
National Bureau of Standards
Washington, D.C.

Richard W. Simon, Vice President
United States Steel
Pittsburgh, Pa.

Robert E. Simpson, Director

Office of International Regional Economics

Department of Commerce

Washington, D.C.

Dr. O. Simpson, Deputy Director
National Physical Laboratory
Teddington, Middlesex, England

Dr. Andre C. Simonpietri
U. S. Scientific Attache
American Embassy
Rio de Janiero, Brazil

James Simsarian

Office of International Economic and Social Affairs

Department of State

Washington, D.C.

Paul Sithi-Amnuay, Vice President
Bangkok Bank Ltd.
New York, N.Y.

Dr. Charlotte M. Sitterly
National Bureau of Standards
Washington, D.C.

John H. Shoaf, Director

U. S. Department of Commerce Field Office

Santurce, Puerto Rico

George Sivac
Embassy of France
Washington, D.C.

159

L. E. Smart, Jr., Vice President
International Operations
Bendix Corporation
Detroit, Michigan

William Stibravy, Director

Office of International Economic & Social Affairs

Department of State

Washington, D.C.

Dean Smith, Director

Office of Publications & Information

Bureau of Domestic & International Business

Department of Commerce

Washington, D.C.

Edward D. Smith, Director

Business Services and Head, Foreign Trade Division

Department of Commerce

Harrisburg, Pa.

Edward G. Smith
Business & Defense Services Admin.
Department of Commerce
Washington, D.C.

General Edmundo Mecedo Soares
Counsel for Latin America, Inc.
Rio de Janiero, Brazil

Anthony M. Solomon

Assistant Secretary for Economic Affairs

Department of State

Washington, D.C.

Dr. Daniel R. Stull, Director
Thermal Research Laboratory
The Dow Chemical Company
Midland, Michigan

Christopher A. Squire
American Embassy
Moscow, U. S. S. R.

Professor Ronald A. Sterkle
University of Illinois
Champaign, Illinois

Charles W. Stewart, President
Machinery & Allied Products Institute
Washington, D.C.

Rene Stinglhamber, Head, Technical Department

Fabrimetal

Brussels, Belgium

Dr. Herbert Stussig, President

Arbeitsgemeinschaft Industrieller Forschungsvereinigungen

Cologne, West Germany

Dr. Howard E. Sorrows
National Bureau of Standards
Washington, D.C.

Faruk A. Sunter

President, Turkish Standards Institution

Ankara, Turkey

Dr. L. R. W. Soutendijk

Brown Brothers Harriman & Company

New York, N.Y.

R. H. Swanson

U. S. Rubber Company

New York, N.Y.

Dr. George Sponsler
Director for Exploratory Studies
International Business Machines Corp.
Gaithersburg, Md.

Dr. C. E. Starr, Vice President
Esso Research & Engineering Co.
Linden, N.J.

I. B. Tauter
Romanian Embassy
Washington, D.C.

Dr. Gordon K. Teal, Director
Institute for Materials Research
National Bureau of Standards
Washington, D.C.

Hoyt Steele, Vice President
International General Electric Exports
New York, N.Y.

Walter D. Thomas
FMC Corporation
San Jose, Calif.

Joshua Stern

National Bureau of Standards

Washington, D.C.

Robert L. Stern

Chief, Office of Industrial Services
National Bureau of Standards
Washington, D.C.

Alexander B. Trowbridge

Assistant Secretary for Domestic and International Business

Department of Commerce

Washington, D.C.

Roy P. Trowbridge, Vice President
General Motors Technical Center
Warren, Mich.

160

Dr. A. C. Tugado

Senate Committee on Scientific Advancement

Philippine Congress

Manila, Philippines

Dr. Howard Turner, President
Turner Construction Company
New York, N.Y.

Alexandru Ungur
Romanian Embassy
Washington, D.C.

Dr. Pierre Uri, Director of Studies
Atlantic Institute
Paris, France

Dr. Harold Vagtborg, Executive Chairman
Board of Trustees
Southwest Research Center
San Antonio, Texas

Heimon van Blankenstein
Economic Minister
Embassy of The Netherlands
Washington, D.C.

J

^aniele Verduani
Directorate General for International
> Market Affairs
European Economic Community
Brussels, Belgium

Charles T. Vetter

U. S. Information Agency

Washington, D.C.

Nikola Videnov, Deputy Chairman

State Committee for Science & Technical Progress

Bulgarian Legation

Washington, D.C.

Irvin V. Voltin

National Bureau of Standards

Washington, D.C.

R. G. Voysey, Counselor
British Embassy
Washington, D.C.

Robert S. Walleigh

National Bureau of Standards

Washington, D.C.

Dr. H. M. H. A. Van der Valk
Executive Director
International Monetary Fund
Washington, D.C.

Leiton Van Nort

Office of International Economic & Social Affairs

Department of State

Washington, D.C.

A. B. VanRennes, Technical Director
Bendix International
New York, N.Y.

Donald van Tuyl

Secretary of the Committee on Technology
U. S. Chamber of Commerce
Washington, D.C.

Herman C. Van Vierssen, Scientific Attache
Embassy of The Netherlands
Washington, D.C.

Tibor Vasko, First Secretary

Embassy of the Czechoslovak Socialist Republic

Washington, D.C.

Russell Venn, Vice President
Humble Oil & Refinery Company
Houston, Texas

Dr. Merrill B. Wallenstein
National Bureau of Standards
Washington, D.C.

Samuel H. Watson
Manager, Corporate Standardizing
Radio Corporation of America
Camden, N.J.

Norwood W. Watts
Manager, International Marketing
Philco-Ford Corporation
Washington, D.C.

Samuel C. Waugh, Director
The Atlantic Council, and
Consultant, Blaw-Knox Company
Washington, D.C.

Charles E. Webber
Sun Oil Company
Philadelphia, Pa.

Dr. Robert T. Webber
American Embassy
Tokyo, Japan

Ernest M. Weber

Vice President for Scientific Affairs

Charles Pfizer & Co., Inc.

New York, N.Y.

161

Irving H. Weil
Weil Brothers, Inc.
Frederick, Md.

Bruno Weinschel, President
Weinschel Engineering Co., Tnc.
Gaithersburg, Md.

Dr. S. G. Weissberg
National Bureau of Standards
Washington, D.C.

Donald S. Welshon
International Division
Illinois Tool Works, Inc.
Chicago. Illinois

George C. Wells, Vice President
Union Carbide Corp.
New York, N.Y.

Dr. Edward Wenk, Executive Secretary
National Council on Marine Resources and

Engineering Development
Washington. D.C.

Dr. F. Joachim Weyl, Chief Scientist
Office of Naval Research
Department of the Navy
Washington, D.C.

Professor Ralph H. Wherry
Dept. of Commerce & Management
Pennsylvania State University
University Park, Pa.

William A. Wildhack
National Bureau of Standards
Washington, D.C.

John D. Wilkes

Agency for International Development

Department of State

Washington, D.C.

Dr. William W. Williams
American Embassy
Bonn, Germany

W. J. Wills, President

The American Trade Association of New Zealand

Wellington, New Zealand

Bruce Wilson

National Bureau of Standards

Washington, D.C.

Prof. Miguel S. Wionczek
Center for International Affairs
Harvard University
Cambridge, Mass.

John G. Wirt, Program Evaluation Staff
Bureau of the Budget
Washington, D.C.

Dr. Gregory B. Wolfe, Director
Office of Research & Analysis for the

American Republics
Department of State
Washington, D.C.

Dr. Nathan H. Woodruff
Scientific Attache
American Embassy
Buenos Aires, Argentina

Harold K. Work, Secretary
National Academy of Engineering
Washington, D.C.

A. H. A. Wynn
Head, Standards Division
Ministry of Technology
London, England

Dr. Mohamed Yeganeh
Deputy Minister of Economy
Tehran, Iran

Eiji Yokoyama, Executive Vice President
Mitsubishi International Corporation
New York, N.Y.

Charles I. York
Seismology Division
Coast & Geodetic Survey
Rockville, Md.

Dennis R. Young

National Bureau of Standards

Washington, D.C.

Bernard Zavos

National Bureau of Standards

Washington, D.C.

M. Zvegintzov, Chief Planning Advisor
Dept. of Planning & Policy Coordination
National Research Development Corp.
London, England

62

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